While lower than expected inflation keeps Bank of England (BOE) away from a rate hike it is boosting consumers sentiment pushing tem to spend more as large retailers continue to provide discount to lure customers.
Moreover lower oil prices has boost consumers wallet.
- According to CBI survey, which was done on 131 firms, retail sales volume growth slowed somewhat on yearly basis in June from their strong rally in May, however remains above average compared to history. Moreover future outlook remains brighter according to the survey.
Key highlights –
- Overall orders were much slower in June but likely to pick up pace in July.
- Wholesaling and motor trades saw robust growth, sales are expected to accelerate further in July.
- 44% of retail sector respondents said volumes were up on yearly basis, and 15% said they were down, giving a balance of +29%. In May balance was +51%
- 38% Retailers expect sales volumes to grow next month and 5% to fall
- Highest growth was in normal goods (+82%), furniture & carpets (+63%), clothing (+57%) and chemists (+47%) and lowest in footwear & leather (-36%), alongside non-store goods (-50%)
- Grocers sales were flat (0%), following a solid rise in May (+50%)
- 53% of wholesalers reported sales volumes higher and 21% said they were down, giving a balance of +32%.
- 55% of motor traders reported sales volumes to be up and18% said they were down, leaving a balance of +37%.
As outlook improves in UK, Bank of England (BOE) is closing in on raising rates. Inflation which as of now stands at 0.1% remains the only hurdle ahead of BOE.
Pound is currently trading at 1.572 against dollar. Though fundamental is building up, pound may remain under pressure against dollar in near term.
The material has been provided by InstaForex Company – www.instaforex.com