News Article - 18 August 2006
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Retail sales saw an unexpected slowdown last month, according to government figures.

The Office of National Statistics (ONS) recorded 0.3 per cent fall on June's sales increase of 0.7 per cent.

Food and drink sales remained up 0.4 per cent in July, but many have put the slump down to a hangover from the retail spending boost provided by the World Cup.

Non-food sector sales were the most disappointing, seeing a 0.5 per cent fall. While clothing stores were up 2.3 per cent, household goods fell by 3.4 per cent.

"The unexpected fall in July retail sales revives doubts about the strength of consumer spending, although it must be acknowledged that July's decline in sales follows robust gains in recent months and may have been adversely affected overall by July's hot weather," said Howard Archer of research firm Global Insight.

"While record high employment will provide some support, we believe that consumer spending is likely to be relatively muted over the coming months as the recent interest rate hike adds to the significant headwinds already facing the consumer."

Despite the fall, the ONS was not downbeat about the statistics, saying they remained "robust" in terms of long-term growth.

Sales figures were four per cent higher than those recorded in July 2005, aided by 5.2 per cent growth in the food sector in a year.

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