Euro 2016 fails to boost consumer spending
Euro 2016 failed to significantly boost retail sales as consumers took a cautious approach to spending in the run-up to the referendum, figures suggest.
The retail sales balance saw lacklustre growth in June, with a balance of +5% of retailers reporting volumes up on this time last year, from +7% in May, according to the pre-referendum vote Distributive Trades Survey from the CBI.
The figures show little evidence of retail sales getting a significant boost from the European football championships, although this only started on June 10 and the CBI survey ran until June 14.
One of the strongest growing sectors in June was furniture and carpets, possibly lifted by a surge in house purchases made by buy-to-let and second home buyers ahead of the April rise in Stamp Duty for the sectors.
IHS Global Insight said it still looked likely that consumer spending will have been "decent" in the second quarter.
It said: "A massive question now is how well or badly will retail sales perform in July following the UK's vote to leave the EU?
"While the CBI survey reported that a balance of +10% of retailers expect sales to be up year-on-year in July, this was before the EU referendum result was known.
"The fundamentals are currently still pretty decent for consumers with employment at a record high and earnings growth running well above inflation, however these fundamentals may suffer markedly going forward.
"Indeed, following the vote to leave the EU, the strong suspicion is that consumer spending will be severely pressurized for some time as a consequence of increased uncertainty, likely higher unemployment and squeezed purchased power.
"It is probable purchasing power will be squeezed by inflation being pushed up markedly by a sharp fall in sterling."