Moderate deceleration in U.K. retail sales growth continues

U.K. retail sales growth (in volume terms) registered a modest pickup in July, rebounding by 0.1% m/m. Further, June numbers were marginally revised upward by 0.1pp over the month and 0.2pp over the year, now coming in at -0.1% m/m (4.2% y/y). 

Amid persistent deflation across the board, retail price deflation stood at -3.0% y/y. In line with the trend observed over the past few months, fuel products remain the primary negative driver (-11.2% y/y, -1.1pp contrib.) while negative contributions to the yearly rate from food and non-food retail prices (-0.8pp and -0.7pp) continue to remain substantial.

"Weaker-than-expected outturn adds to the downward momentum in total volume retail sales since December 2014 and expects the private consumption growth to ease moderately in the second half 2015. With ongoing elevated consumer confidence and cautiously positive prospects from wage growth, private consumption growth should nonetheless remain decent. After 0.8% q/q in H1 15, we forecast private consumption to slow down to 0.5% q/q in Q3 (similar in Q4). Moreove, headwinds from fiscal consolidation and EU referendum uncertainty will push household consumer growth lower into 2016", says Barclays in a report on Thursday.