Declines in retail sales expected for February’s report after last month’s stellar print in the UK were surprised by a shallower slide of only -0.40% in lieu of -0.70%. This comes in contrast to the +2.30% growth seen last month, and has brought yearly statistics upwards for the ride. The current year-over-year growth in the UK’s retail sector stands at 4.10%, above expectations of 3.50% for 2016, but again, lower than January’s 5.00% even. The culprits responsible for the recent weakness, though it is less than expected, are energy prices and clothing, the latter of which suffered from unseasonable quarterly weather. Core retail sales, excluding volatile constituents like energy, are much more stable.
With the exception of clothing and also footwear, UK retailers had another very good month, according to the Office of National Statistics’ Melanie Richards. Favorable employment and wage trends continue to lift fundamentals above expectations, with the exception of decade lows seen in clothing. Policymakers will likely look towards the steady recovery of this particular metric in consideration of further action, though any thoughts on the matter right now are muted due to the more pressing Brexit issue, which will be discussed at the upcoming referendum. The pound lost against peer currencies for three straight days this week, closing lower around 1.413 after the report.