Retail sales were forecast to have risen by 0.3 per cent in August, but instead fell 0.5% month on month, the first decline since January. The Office for National Statistics also revised Julyâs sales growth down to 0.8% from 1.1%.
Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments says, âGoing into a period of fiscal tightening, we would expect to see consumer demand winding down and it is worth remembering that July's retail sales figures were a lot stronger than expected. However, whilst this data doesnât signal the start of a double dip recession, it certainly isnât encouraging.â
In spite of the weaker figures, sterling eventually climbed back up to $1.5601 post-release. Bolsom says, âNow the markets have had time to digest the data, they are bidding the pound back up, which implies that it isnât a concern for them just yet. But bearing in mind that the Coalition Government is set to announce cuts in government departments of up to 25 percent, it is probable that trading conditions will toughen over the next few months.