British shoppers made more purchases than ever in almost a decade in Q2 regardless of lower spending in June. This is according to official data released two weeks ago; reassuring the Bank of England that the slow start to 2018 is no more.
The volume of retail sales in June unpredictably dropped 0.5 percent from the previous month— contrary to the economists’ prediction in a Reuters poll.
Sales volumes in Q2 alone were 2.1% higher than what was recorded in Q1 making the largest quarterly jump since Q1 of 2004 as reported by U.K’s Office for National Statistics.
Nevertheless, financial marketplaces honed in June’s weak figure, pushing the sterling down to under $1.30— the lowest ever since Sept. 2017, following economy-shaking political disputes surrounding Brexit.
According to most of the economists that took part in the Reuters poll, the BoE would increase rates on August for the second time ever since the start of the monetary crisis.
Setbacks in the economy
But the drop in June sales raised investors’ concerns spawning fear that there may be a repeat of what happened in May when the BoE refrained from a broadly expected rate increase due to a set of soft data that came up before the hike.
U.K Retail sales growth and the overall economy of Britain were sluggish in the starting three months of 2018. The economy was slowed down by high inflation rates, heavy snowfall and the expectation of 2019’s Brexit. The BoE announced in May that it would avoid raising rates until it was positive growth was steady.
Retail volumes for June were 2.9% higher than 2017’s records against estimations of a 3.7% rise, slumping from May’s 4.1%, which was the fastest yearly growth rate as from Nov. 2016.
Impact on GDP
The Office for National Statistics said the strong performance of the retail sector (which accounts for only 5% of Britain’s economy) would likely add around 0.1 percentage points to Q2’s GDP growth.
At the start of the month, Mark Carney, the Governor for BoE Governor said the economy seemed to be growing as predicted reinforcing the market’s expectations for a boost. However, his deputy Jon Cunliffe noted the growth in wages was a bit slower and less than the BoE had anticipated.
According to the IMF (International Monetary Fund), at 1.4 percent, the overall UK economic growth this year is probably the weakest since 2012.
According to retail merchant services reviews, merchants are positive sales will go up. Hopefully, UK’s economy will grow stronger amid the many challenges it faces.
Author Bio: Payment industry expert Taylor Cole is a passionate merchant account expert who understands the complicated world of accepting credit and debit cards at your business. His understanding of the Retail Design Agency sector has helped thousands of business owners save money and time.