The volume of retail sales in the U.K. fell by more than double the amount expected in the month after holidays and warm weather boosted hopes that the sector was on pace for strong second quarter growth, according to The Daily Telegraph. On Thursday, the Office for National Statistics reported that retail sales volumes dropped by 1.4% in May, more than reversing the strong 1.1% growth recorded during April. The drop was the largest since January 2010 and more than double the 0.6% fall that economists expected, driven by the largest monthly decline in food store sales since June 2008.
The severity of the drop was linked to the fallout of an artificially high reading the previous month due to temporary positive factors that sent April’s growth to the highest level in that month since 2002. Vicky Redwood of Capital Economics said the data confirmed the false strength of growth in April, and said that the new data shows, “The underlying trend in sales over the past several months looks broadly flat at best.” Howard Archer of IHS Global Insight warned that the report “does not bode at all well for gross domestic product growth in the second quarter,” and could delay the tightening of fiscal policy.
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