Fashion and sunshine lift UK retail in clearance month June, says ONS

Sunny weather helped British retail sales rise more strongly than expected in June and shake off a gloomier start to the year, offering some signs that the economy as a whole might be regaining speed after a lull. Britain's economy went through a soft patch at the start of the year, and data since then have been mixed, as consumers feel the squeeze from higher inflation driven in large part by last year's vote to leave the European Union.

Retail sales volumes rose by 0.6 percent month-on-month in June, beating economists' forecasts in a Reuters poll for a 0.4 percent rise, the Office for National Statistics said, after falling 1.1 percent in May.

Looking at the three months to June as a whole, which smooths out monthly volatility in the data, sales rose by 1.5 percent, cancelling out a 1.4 percent drop in the first three months of 2017, the weakest calendar quarter since 2010.

"A particularly warm June seems to have prompted strong sales in clothing, which has compensated for a decline in food and fuel sales this month," ONS statistician Kate Davies said. It also can't be a coincidence that the higher sales coincided with the fashion sector moving into markdown mode as it shifted summer inventory and prepared for early autumn season drops.

Compared with a year earlier, retail sales rose 2.9 percent in June, beating forecasts in a Reuters poll.

The ONS said Thursday's retail data was likely to add 0.09 percentage points to the growth rate of the overall economy in the second quarter, which was just 0.2 percent in the first three months of 2017.

Weaker consumer demand is a key reason why many economists predict growth will slow this year, though the Bank of England expects stronger exports and business investment to compensate.

Despite a surprise fall in inflation last month, prices are still rising at close to their fastest rate in four years, and weak wage growth means many households feel under financial pressure as Britain starts talks to leave the European Union.

Last month also saw Prime Minister Theresa May unexpectedly fail to win a parliamentary majority in the snap election she called for June 8, which hurt consumer sentiment according to some surveys. A further pass through of the effect of last year's fall in the pound may still be to come.

Clothing and footwear retailer Sports Direct reported a 28.5 percent slump in full-year core earnings on Thursday, after it did not pass on to shoppers the full increase in its import costs caused by the weaker pound.

Additional reporting by Sandra Halliday