UK retail spending rebounds in July on effective promotions, good weather

The United Kingdom retail spending rebounded for the month of July, largely owing to huge discount sales amid promotional offers that kept consumers optimistic in spending on shopping. Also, a good weather outweighed any immediate concern about the consequences of Britain's decision to leave the European Union, Reuters reported.

Retail spending in July was 1.9 percent higher than a year earlier, the biggest rise in six months and up sharply from 0.2 percent growth in June, when bad weather added to uncertainty around June 23's referendum, data released by the British Retail Consortium (BRC) showed Tuesday.

On a like-for-like basis - a measure which strips out changes in floorspace and corresponds more closely with retailers' results - sales were up 1.1 percent on the year in July, compared with a 0.5 percent dip in June.

"Little has materially changed for most UK households in the wake of June 23, so it is not surprising to us that sales are simply responding to their normal underlying drivers," said Helen Dickinson, Chief Executive, BRC.

Further, official data has been scarce since the referendum but most business and consumer surveys have pointed to a sharp slowdown, prompting the Bank of England to cut interest rates last week for the first time since 2009 and restart quantitative easing.

Meanwhile, the Bank of England now expects growth of only 0.8 percent in 2017, a fraction of the 2.3 percent that was projected earlier this year. The Bank slashed interest rates to 0.25 percent, the first rate cut since 2009, and expanded its bond purchasing program by a combined GBP70 billion.

The International Monetary Fund (IMF) has also lowered its economic projections this year and next, citing Brexit-induced volatility as the main reason for the downgrade. However, the IMF was more optimistic about the UK’s growth prospects. The international lending institution pegged UK growth at 1.3 percent in 2017.