Retail sales boosted by World Cup to defy expectations

Retail sales defied analysts' forecasts in May to increase 0.6%, as consumer spending was boosted by the World Cup.

The ONS said household goods stores increased their sales volumes by 1.7%, driven by a strong showing for electrical stores prior to the start of the World Cup. However, non-food stores as a whole remained static.

Food stores increased their volumes by 1.2% while non-store retailing increased 1.8%.

Year on year, retail sales were 2.2% higher, with food stores posting a decrease of 0.5% while non-food stores increased 5.4%. Within predominantly non-food stores there were rises across all sectors, the largest being non-specialised stores at 9.4% and textile, clothing and footwear outlets at 7.1%.

Analysts forecast a rise of 0.1% for the month of May and year-on-year growth of 2%.

The ONS said sales volumes in the three months to May were also 1.7% higher than the same period a year ago.

The better-than-expected sales helped the pound recover from a disappointing overnight session, rising 0.25% against the dollar to $1.4735 and 0.14% against the euro to 1.1951.

Mark Bolsom, head of the UK Trading Desk at Travelex Global Business Payments, says: "This is a welcome piece of good news and shows the consumer's underlying resilience. Although the World Cup will have played a large part in boosting sales it is consistent with recent upbeat data and it will reassure the Chancellor that the UK economy is strengthening.

"There is a downside however. As positive data continues emerge, the Chancellor will feel increasingly confident about taking a tougher stance in the budget next week. Continued economic fragility is the main reason the Chancellor hasn't enacted stronger austerity measures already. If there were any doubt before, I think we can now safely assume that Osborne will take a tough stance in the budget next week."