British retail sales fell unexpectedly in May as shoppers tightened their belts after splashing out over Easter, while government borrowing hit a record high, official data showed today.
Sterling fell to a one-week low against the euro on the data while gilt futures rallied as investors tempered some of their recent optimism over Britain's economic outlook.
The Office for National Statistics said retail sales volumes fell 0.6 percent on the month, against a forecast of a 0.4 per cent gain. That left them 1.6 per cent lower than in the same month a year ago.
However, the ONS cautioned that weather-related effects in May 2008 made annual comparisons difficult. May last year was the sunniest in almost a century.
Separate figures showed Britain's public finances deteriorated more than expected last month, with public sector net borrowing rising to a record high close to £20 billion.
“The retail sales figures are disappointing in the sense that they have fallen back on the month," said Philip Shaw, chief economist at Investec.
“Disappointing numbers on the public finances haven't exactly been an unknown phenomenon over the past year. Even so, the figures underline the fact that concerted fiscal tightening will be necessary once the recovery is in train.”
Reuters