Summer Sun Fuels UK Spending Spree

Retail sales rose at their fastest annual pace for over two years in July as the UK basked in summer sunshine.

The Office for National Statistics (ONS) said the heatwave boosted sales of barbeque food and outdoor items in particular as people enjoyed the spell of warm weather nationwide.

Retail sales volumes jumped 1.1% on the month - almost twice as fast as expected - to give an annual rise of 3%, the highest since January 2011.

Feedback from supermarkets suggested the sunshine also sparked demand for food, alcohol and summer clothing, the ONS said.

A separate report by the British Retail Consortium had already found that the 'feelgood factor' of the weather was also strengthened by the arrival of the Royal baby and sporting success - namely wins for the British and Irish Lions in Australia, Andy Murray at Wimbledon and Chris Froome in the Tour de France.

The BRC pointed to the best July since 2006 for its members - mostly larger stores - with sales values up 3.9% on the year.

The performance - potentially boosted by families choosing to remain in the UK over the holiday season - gives some scope to the possibility that economic growth is improving faster than expected.

The retail sector accounts for 6% of the UK's economy but some economists question whether the level of spending can be maintained given the continuing squeeze on household incomes from wage growth failing to keep pace with rising prices.

New Bank of England governor Mark Carney has sought to reassure consumers, markets and businesses, that the base rate of interest will not be raised until the unemployment rate drops to 7%.

The bank does not expect that to happen for three years - giving potential encouragement to people to spend what spare cash they have because savings rates are so poor.

While a third consecutive month of rising retail sales is the latest sign that Britain's recovery is gathering pace, there has also been robust data from the wider services sector as well as upbeat figures from manufacturing and construction.

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