In an unexpected turn of events, UK’s retail sales growth soared to its two-year high in the early periods of September. The industry data helped in the boost of the said data in which has fasten the phase of the economic growth of the country, plus adding to the action of raising interest rates by the Bank of England in the coming month of November.
The retail sales balance of the Confederation of British Industry surged to at least 42 points in September. This is an increase from August data of just -10 points. Additionally, this is the marked as the best performance in two years and has indeed exceeded market expectations.
According to the Bank of England, there were indications in September that the consumer demand might start to uptrend. This is supported by the record-high in the employment data. However, the bank adds that it is too early if such would counterbalance the fragile business investment.
As for the British Pound, the sterling had an upsurge against the US Greenback once just right after the said data and the prices of the British government bond declined.
Liverpool One - A shopping district in England
“The robust CBI survey will likely fan belief that the Bank of England could very well raise interest rates ... as soon as November,” Chief Economist Howard Archer told reports.
The data shows that the growth of the gross domestic product had a 0.4% rise in the recent third quarter. It was a pick up from 0.3% upsurge from June’s quarter, Archer added.
“In the coming months”, the Bank told reports that the policymakers is estimating a rise in the interest rates which was a first in more than a decade if the inflation rate and the economy generally climb in the coming periods.
Various analysts were being vigilant on the recent rise on the retail sales data on Wednesday. With the Britain’s exit from the European Union, it was still uncertain.
“With the pressure on incomes set to persist, retailers will continue to face a challenging environment,” Economist Anna Leach told reports.
Fashion retails and supermarkets were marked as the best performing ones for the said sector in September.
In the coming month, BoE estimates that the inflation might go beyond 3% which can fall in the months after. To add, wage growth can also rise despite having no clear signs of it at the time being.
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