Women's soccer and hot weather boost British retail sales in July

By David Milliken

LONDON (Reuters) -British retail sales rose more than expected in July, boosted by good weather and the women's European soccer championship, but annual growth was slower than expected after extensive revisions to previous months' data.

Sales volumes in July were up 0.6% from June, the Office for National Statistics said on Friday, above economists' forecasts of a 0.2% rise in a Reuters poll. But the annual growth rate came in slightly below forecast at 1.1% and sales fell 0.6% in the three months to July.

June's 0.9% monthly growth rate was revised down to 0.3% and there were significant other corrections to past data.

"The retail sales figures are a bit softer than they look," said Paul Dales, chief UK economist at Capital Economics. Overall, the revisions left sales volumes 0.5% below where they had been previously and July's boost largely reflected one-off factors, he added.

Consumer price inflation rose to 3.8% in July and the Bank of England expects it to hit 4% in September, although for now average wages are still rising faster than prices.

The ONS had delayed the latest data release to allow more time to correct previous seasonal adjustments that had not accounted properly for holidays such as Easter and the different length of different months' collection periods for retail data.

"The new figures published today show a similar overall pattern of three-month on three-month growth, but with less volatile month-on-month changes," said James Benford, the ONS' incoming director general of economic statistics.

DATA ERRORS

Britain's statistics agency faced significant criticism in a government report in June for its past management culture and performance, which the report concluded contributed to long-running problems with key labour force data and other figures.

First-quarter retail sales growth was revised down to 0.7% from 1.3% while second-quarter growth was revised up to 0.3% from 0.2%.

Sterling was little changed after the data.

The figures come a week before the release of July gross domestic product data, which economists expect to show a slowdown after unexpectedly strong growth in the first half of the year, partly due to higher government spending.

Benford said the downward revision to first-quarter retail sales growth would lower the 0.7% first-quarter GDP growth rate by 0.03 percentage points if no other revisions were made before revised GDP data is published at the end of September.

Last month the British Retail Consortium reported that spending at its members, mostly larger retail chains, had risen by 2.5% in cash terms in July, boosted by higher spending on food and summer clothes during the fifth-hottest July on record.

But after higher prices were taken into account, especially for food, this represented a fall in purchase volumes.

Electricals retailer Currys said on Thursday that hot weather had spurred spending on air conditioners and fans, helping lift sales in Britain and Ireland by 3% in the four months to the end of August.

Friday's ONS figures showed that food purchases were down 0.2% on the month and department store sales were 1.5% lower, while clothing and footwear sales jumped 2.5%, as did online and mail-order retailing.

(Reporting by David MillikenEditing by Kate Holton and Gareth Jones)