Retail sales in the U.K. sounded one more note in the sad economic song of Europe on Thursday, as consumers tightened their belts against an inflation rate that was more than twice what the Bank of England (BoE) had set as its target. The news felled the pound, which lost further ground against the dollar in morning trading.
Sales for July were up only 0.2% over June, which had recorded a 0.8% revised increase, according to the Office for National Statistics in London. Inflation was at 4.4%. Wage growth was 2.6%, leaving a gap between costs and the money consumers have to spend on necessary items. Bloomberg reported that jobless figures issued Wednesday were also up, increasing at the highest rate in more than two years.
Samuel Tombs, an economist at Capital Economics Ltd. in London, was quoted in the report saying, “The outlook for the consumer sector remains poor. Recent sharp falls in consumer confidence, increases in unemployment and the intensifying squeeze on consumers’ real incomes all point to high street sales volumes slipping back later this year.”