A wet and windy turn in the British summer in July put consumers off visits to the high street and other shopping centres as retail sales growth slowed from June's energetic pace.
Following the second warmest June on record, the turn in the weather in July was expected to have crimped consumer activity, yet retail sales managed a moderately robust performance.
Indeed, sales grew for a second-consecutive month, a rare occurrence in the past two years, and made all the more surprising given the squeeze on household spending due to rising prices and low wage growth.
July retail sales
Headline retail sales rose 0.3% month on month from a year ago, matching June's downwardly revised figure and beating expectations of 0.2% growth.
On an annualised basis, headline sales rose 1.5% in July, down from 2.8% in June. June's annual rate was also downwardly revised from 3%. Analysts had expected a 1.3% rise.
Excluding fuel, sales rose 0.5% month on month and by 1.5% annually. Both efforts beat expectations.
Alex Marsh, managing director of Close Brothers Retail Finance, said: "Defying the stormy weather and keen to make the most of the longer summer evenings, consumers still spent on outdoor activity equipment including golf, camping and cycling gear in July."
Impact on rate expectations
There were mixed reviews of the data from analysts, with some saying the data confirmed the pay gap-fuelled slowdown, while others said the data were encouraging given the household spending squeeze and miserable weather.
Among the latter, Ruth Gregory at Capital Economics said: "Overall, the data suggest that consumers are weathering the current bout of high inflation fairly well."
She continued: "And as the inflationary effect of sterling’s fall fades next year, there should be scope for sales volumes growth to accelerate."
But there were few who thought the data strong enough to persuade the Bank of England it would need raise interest rates any time soon.
James Smith at ING cited low wage growth and rising inflation, plus gains in consumer credit that all pointed to risks for consumer spending.
"We don't expect a Bank of England rate hike this year," he said.
Sterling was down against both the dollar and the euro.
It fell 0.2% versus the dollar to $1.2870 and was down 0.4% at €1.0997 against the euro.
Stocks were also taking a breather, with the FTSE 100 down 0.2% 7,412.26 in late morning trade in London.