LONDON (Reuters) - British shoppers spent strongly for a second month in July, as a heatwave continued to boost retail sales, though some signs of cooling demand were appearing, the Confederation of British Industry said on Wednesday.
The CBI's retail sales balance fell to +20 in July from a nine-month high of +32, a slightly smaller drop than either retailers or economists polled by Reuters had expected.
Looking at the three months to July as a whole, sales growth of +21 was the highest since December 2016, but for August retailers expect sales growth to flatten.
"While the heatwave has boosted retail sales in recent months, we may be seeing some early signs of a cooling off, with orders falling in the year to July and retailers expecting no growth in sales next month," CBI economist Alpesh Paleja said.
British retail sales and the economy as a whole were weak in the first quarter of 2018, but subsequent signs of a pick-up have bolstered economists' expectations that the Bank of England will raise interest rates next week.
"Long-term challenges facing the retail sector are significant. Continually subdued real wage growth means that households are still feeling the pinch, and retailers are still grappling with deeper structural issues," Paleja said.