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Retail sales drop takes economists by surprise

By Holly Williams

Retailers suffered an unexpected drop in sales last month as shoppers bought less household goods, food and petrol, according to official figures.

The Office for National Statistics (ONS) said retail sales fell 0.2% between May and June, confounding forecasts for a rise of 0.4%, while the annual rate of growth slowed to 4%.

This marked the slowest annual growth since last September.

The ONS said that the drops were seen across petrol stations, food stores and shops selling household goods.

But it added that sales by volume were still up by 0.7% overall quarter-on-quarter in the three months to the end of June.

Economists said June's drop was a surprise, but believe robust underlying consumer spending should help shore up growth.

Paul Hollingsworth at Capital Economics said: "The weaker tone of June's retail sales figures does not alter the big picture that the consumer recovery remains in full swing."

Meanwhile, Howard Archer, chief UK economist at IHS Global Insight, said that despite the fall in sales last month, "consumer spending made a healthy contribution to GDP growth".

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