UK retail sales slip in June as consumers struggle with inflation

LONDON (Reuters) -British retail sales edged down in June as drivers cut back on record-priced fuel, with consumers reducing shopping less than expected, data showed, though the trend remained weak as households struggle with surging inflation.

Retail sales volumes fell by a smaller-than-expected 0.1% from May, the Office for National Statistics said on Friday. Economists polled by Reuters had expected a 0.3% monthly fall.

"After taking account of rising prices, retail sales fell slightly in June and although they remain above their pre-pandemic level, the broader trend is one of decline," Heather Bovill, an ONS statistician, said.

In the April-June period sales volumes were down by 1.2%.

Excluding automotive fuel, volumes in June rose by 0.4% on the month, compared with a poll forecast for a fall of 0.4%.

Automotive fuel sales volumes fell by 4.3%, the biggest drop since October last year when a shortage of truck drivers triggered a wave of panic buying of petrol and diesel.

A monthly fall in May was estimated to have been more severe than originally thought, showing a drop of 0.8% from April compared with an initially reported decline of 0.5%.

Britain's economy is feeling the strain of inflation which is on course to hit double digits, driven in large part by the sky-rocketing fuel prices.

The Bank of England is expected to raise interest rates for the sixth time since December on Aug. 4, potentially adding to the drag on economic growth.

Paul Dales, an economist with Capital Economics, said Friday's data was affected by an extra public holiday last month.

"But even so, it is becoming clearer that the cost of living crisis is behind the steady decline in sales volumes in recent months," Dales said. "We think a recession is just around the corner."

Earlier on Friday, a survey showed consumer confidence, remained at its lowest since records began in 1974.

(Reporting by William Schomberg; editing by William James and John Stonestreet)