British consumers gave the UK economy a boost in June as warmer weather helped drive a retail recovery following the four-year low in sales struck in the previous month.
Data from the Office for National Statistics showed that core retail sales, which excludes fuel sales, rose by an annualised 3% in June, bouncing strongly from May's four-year low of 0.6% and beating forecasts of a 2.5% rise.
Including fuel sales, the rise was still 2.9%, beating forecasts of a 2.5% rise and up from the previous month's 0.9%.
The ONS noted that sales growth in June was largely a consequence of warmer temperatures coinciding with the introduction of summer clothing lines.
This helped offset a 0.4% decline in spending in food stores, the lowest since July 2014 in this sector.
Meanwhile, average weekly spending online was £1.1bn, up by 15.9% when compared with the same month last year.
Last week, the British Retail Consortium reported similar circumstances led to a 1.2% rise in like-for-like retail sales in June as the second hottest June on record prompted shoppers onto the high street. BRC reported online sales grew 10.1%.
Analysts were not notably impressed with Thursday's data, however, suggesting that seasonal factors could be quickly unwound.
"The improvement needs to be treated with some caution," said Chris Williamson at IHS Markit.
He added: "Sales were boosted by particularly sunny weather, suggesting some pay-back in seasonal spending may be seen later in the summer."
Real earnings lag
Concerns remain, also, that the gap between inflation at 2.6% (June figures released this week) and average earnings growth at 1.8% (May data reported last week) represents a squeeze households that will become an increasing burden on consumer spending in the coming months.
"The outlook of falling real wages and tightening credit conditions suggest that retail sales will struggle to retain the second quarter’s vigour in the second half of this year," said Samuel Tombs at Pantheon Macroeconomics.
Paul Hollingsworth at Capital Economics also sounded a note of caution: "The squeeze on real incomes that is likely to persist over the second half of this year could yet weigh more heavily on spending growth."
Indeed, there was little bullish reaction on currency markets. Although the pound made a brief turn higher, it soon retreated again and was 0.5% lower against the dollar at $1.2959, and fell 0.5% versus the euro to €1.1259.
Stocks, however, rose and the FTSE 100 gained 0.6% with gains for retailers such as Next, Tesco and Kingfisher.