Retail sales get World Cup boost in June

Spain's goalkeeper Iker Casillas kisses the World Cup trophy after the 2010 World Cup final soccer match victory against the Netherlands at Soccer City stadium in Johannesburg July 11, 2010. REUTERS/Oleg Popov

LONDON (Reuters) - Retail sales volumes received a World Cup boost in June after strong sales of electrical goods drove a faster-than-expected 0.7 percent monthly rise, official data showed on Thursday.

The Office for National Statistics said sales volumes rose 1.3 percent on the year, also faster than the 1.0 percent gain expected after an upward revision to May’s monthly reading to 0.8 percent from 0.6 percent.

The pound rallied a third of a cent against the dollar and the FTSE-100 share index .FTSE erased losses after the data which suggested consumer spending will boost second quarter GDP growth.

A first estimate of GDP will be released on Friday and is expected to show Britain’s recovery gained traction in the second quarter. However, headwinds remain from a sharp public spending squeeze and many economists think the second quarter may prove to be a high water mark.

“The question is not so much how sales fared in June but the outlook over the second half of the year and there are big question marks over the robustness of household spending,” said Philip Shaw, UK economist at Investec.

Household goods stores led the rise in June, with sales jumping by 1.6 percent on the month and 6.1 percent on the year -- their biggest annual increase since May 2008 -- as soccer fans splashed out on the latest technology for the World Cup tournament in South Africa.

Discounting by retailers also lured in shoppers, with many outlets bringing forward seasonal sales. The retail sales deflator, a measure of price inflation, eased to 1.3 percent on the year, barely half May’s level and the lowest since November.

Excluding auto fuel, retail sales were up even more strongly, rising by 1.0 percent on the month and 3.1 percent on the year. Fuel sales are down 15.9 percent in volume terms compared with the same month last year.

Editing by Toby Chopra