UK retail sales strongest in 10 years in second quarter

LONDON, United Kingdom - British retail sales volumes in the second quarter were the strongest in 10 years, although they stagnated last month, official data showed on Thursday.

Retail sales volumes rose 1.6 percent between April and June compared with the previous three months, the strongest calendar quarter since early 2004, according to the Office for National Statistics.

But they rose just 0.1 percent in June from May and by 3.6 percent compared with the same month a year ago.

That was slightly weaker than economists' forecasts in a Reuters poll for increases of 0.3 percent and 3.9 percent.

Second-quarter sales were boosted by a 1.0 month-on-month jump in April, which more than offset a fall in May.

Comparing the second quarter with the same period last year, sales were up 4.5 percent, the strongest calendar quarter since the end of 2004, the ONS said.

Britain's consumers have been the main driver of the country's economic recovery which began last year, helped by low levels of inflation - despite a surprise surge last month - that has eased the pressure on their spending power.

Wage growth, however, remains very weak.

Prices in stores were flat last month, the first time they have not fallen since January.

An ONS official said an annual 2.0 percent increase in prices for the textiles, clothing and footwear sector was unusual given that retailers normally cut prices during the month.

The last time clothing prices rose in the month of June was in 2007.

A survey from the Confederation of British Industry on Wednesday showed British annual retail sales growth quickened in July and that expectations for August also picked up.

Retail sales account for just under 6 percent of British gross domestic product.

Economists expect data on Friday to show GDP grew by 0.8 percent in the second quarter, unchanged from the first three months of the year.

However, they also see a risk of a lower growth rate after industrial output figures were weaker than expected in May.