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World Cup nets 0.7% growth for retailers

The high street enjoyed better fortunes than England's footballers in June as shoppers splashed out for the World Cup, retail figures showed.

Retail sales volumes rose by a higher-than-expected 0.7% over the month, while May's sales increase was also revised up to 0.8%, the Office for National Statistics (ONS) said.

Household goods stores and department stores were the biggest contributors to the June rise, with sales growth of 1.6% and 1.5% respectively.

The figures showed overall sales volumes up 1.3% on a year earlier, with household goods stores enjoying their strongest annual growth since May 2008. Shoppers were drawn in by summer sales as prices across non-food stores fell year-on-year for the first time since last November, led by price-slashing at department stores and household goods retailers.

Evidence from many retailers suggests however that consumers are still reluctant to commit to big-ticket purchases, with B&Q owner Kingfisher reporting weak appetite for kitchens and bathrooms.

And Chancellor George Osborne's savage emergency Budget will squeeze the high street next year, when VAT is hiked to 20%, while nerves remain over high unemployment, weak house prices, and public sector job cuts.

Graeme MacLaughlin, relationship director at Barclays Corporate Northern Ireland, said: "The World Cup and warmer weather encouraged consumers to spend on electricals, garden furniture, and clothing. Many shoppers had delayed buying summer clothes due to the unseasonal weather we experienced in April and May, when consumers traditionally spend on holiday items.

"Early indications are that cross-border trade is beginning to suffer as sterling strengthens against the euro, and it is undoubtedly getting more challenging for the sector despite June's strong month-on-month rise."

Experts said the retail performance was likely to contribute to faster growth across the economy in the second quarter of 2010.

But British Chambers of Commerce chief economist David Kern added: "The economy is still weak, businesses are struggling, and the full impact of the emergency Budget's austerity measures are yet to take effect."