MNI DATA ANALYSIS: UK Jul Sales Up, Shoppers Avoid High St

--UK July Total Sales +0.7% m/m, +3.5% y/y 

--UK July Non-Fuel Sales +0.9% m/m, +3.7% y/y 

--UK July retail prices +2.1% y/y vs +2.3% in June

By Jamie Satchi and Jai Lakhani

     LONDON (MNI) - Retail sales volumes returned to growth in July, marking a

solid start to the third quarter, with the persistent high street struggles

masked by healthier online sales.

     Sales volumes rose by 0.7% between June and July, exceeding the median MNI

median forecast for no change. On an annual basis, retail sales increased by

3.5%, compared to the smaller 1.1% gain notched up last July.

     June sales were unrevised to show a 0.5% monthly fall and a 2.9% annual

gain. The originally-reported 2.1% quarterly gain in the second three months of

the year, the largest rise in a calendar quarter since March of 2004, was

revised down to 2.0%, but was still the highest since Q1 2004.

     Despite the change an ONS official said that the downward revision was not

sizeable enough to have a material impact on overall second quarter GDP, of

which retail sales accounts for 5.4%.

     However, consumer spending rose by 0.3% in the second quarter, suggesting

that household spending on non-retail items was constrained between April and

June.

     --DEFLATOR

     The implied price deflator rose by 2.1% in the year to July, the

twenty-first straight increase, but below the peak of 3.3% recorded in September

and the smallest rise since March.

     Fuel prices accounted for much of the acceleration in retail inflation,

jumping by an annual rate of 11.9% in line with the recent rise in crude oil

prices. Excluding fuel, the implied deflator rose by 1.0 -- the joint-lowest

since January.

     Excluding fuel, sales rose by 0.9% last month, above the MNI median

forecast of a 0.1% fall on the month, or by 3.7% compared with Jun 2017.

     June non-fuel sales were virtually unchanged from those originally

reported, falling by a unrevised 0.6% from May and increasing by 2.9% over Jun

2017. Excluding fuel, sales growth was originally reported as up 0.6% 3.0% over

the sixth month of 2017.

     --ONGOING DISCOUNTING

     ONS officials said there was anecdotal evidence that retailers prolonged

sales and promotions for longer than usual. Discounts were witnessed across both

shop floors, particularly clothing -- marrying up with the recent inflation

data, as well as online.

     Activity at predominantly food retailers, which comprises 42% of total

sales, continued to come in strong, boosted by the football world cup and

tennis. Sales rose by 0.1% last month, for a 2.9% annual rise.

     Like in June, this came at the expense of household goods stores, which

again saw activity subdued. Volumes were down 1.5% m/m, after coming in flat in

June, for a 1.7% rise on the year.

     Over the year to July, internet sales rose by 15.3% in value terms to a

seasonally-adjusted 18.2% of all sales, up from the then record-high 18.0%

recorded in June.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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