UK retail sales surge by 1% in June

British retail sales rebounded unexpectedly in June, according to official data that may raise hope the economy will sidestep a downturn in the second quarter.

Monthly retail sales volumes jumped 1.0%, the Office for National Statistics said, well above all forecasts in a Reuters poll of economists that had pointed to a 0.3% drop.

Compared with June 2018, sales were up by 3.8%, again stronger than all forecasts.

Many economists think Britain’s economy is in danger of shrinking in the second quarter, a hangover from the stockpiling boom that took place ahead of the original Brexit deadline in March.

But the unexpected strength of retail sales in June could help to reduce that risk. Still, retail sales over the three months to the end of June grew by just 0.7%, the weakest reading since the three months to February.

“Retail as a whole saw a return to growth in June, mainly due to growth in non-food stores with increased sales in second-hand goods, including charity shops and antiques,” ONS statistician Rhian Murphy said.

The figures clashed with a British Retail Consortium survey that showed sales fell in the year to June at the fastest pace on record for that month.

Some sectors did not enjoy a rebound last month, the official data showed. Department store sales declined for a sixth consecutive month, the worst such run in records that date back to the late 1980s.

Until recently, consumers have so far largely taken Brexit in their stride, helped by modest inflation and stronger growth in wages.

That has helped the world’s fifth-biggest economy at a time when many companies have been cutting back on investment because of uncertainty about Brexit.

Stable inflation, a steady rise in wages and the lowest unemployment since 1975 have continued to boost household incomes, although after inflation wages are still below their peak before the financial crisis.

But there have been other signs consumers are turning more cautious as Britain’s political crisis drags on.

The two contenders to become prime minister next week have both said they are willing to take Britain out of the European Union without a transition deal, if necessary.