British consumers defy forecasts, up their shopping again

LONDON: British consumers unexpectedly increased their shopping in August, although they cut fuel purchases after prices jumped following the resumption of the Iran war, official figures showed on Friday.

Retail sales volumes rose 0.5percent from July, defying economists’ forecasts in a Reuters poll for a 0.2percent decline and adding to signs of resilience in Britain’s economy despite uncertainty linked to the Gulf conflict.

The increase reversed a 0.5 percent fall in July. Sales volumes had also risen in the previous two months, helped by sunny weather and the start of the men’s soccer World Cup in June.

Paul Dales, chief UK economist at Capital Economics, said Britain’s economy looked on track for solid growth of about 0.4percent in the third quarter, or possibly more after Friday’s figures. “That all said, with the peak in inflation yet to come, the biggest drag on households’ real incomes has yet to come,” Dales said. “That’s why we expect real GDP growth to slow in Q4 and Q1.”

Prime Minister Andy Burnham has offered some cost-of-living help to households but he and finance minister John Healey have little room for more giveaways in the new government’s first budget on October 28. August’s increase was driven by online shopping and department store sales, with clothes and food sales also up, Office for National Statistics data showed.