UK Indexes Rise on Retail Sales

Arthi Gupta
22 Jul, 2010
New York City

The UK indexes rose boosted by an increase in retail sales. The BoE Chief Economist Dale notes growth and inflation outlook bleak. The UK retail sales rise 0.7% and car production increases in June.

[R]4:30 PM London – The UK indexes rose boosted by an increase in retail sales. The BoE Chief Economist Dale notes growth and inflation outlook bleak. The UK retail sales rise 0.7% and car production increases in June.[/R]

The Federal Reserve Chairman Ben Bernanke earlier remarked that the economic outlook is ""unusually uncertain."" Bernanke further stated that the Fed is watchful and ready to act in the case of another downturn.

The Fed chief said there would be moderate economic growth along with subdued inflation, and stressed the job market has a long way to go in the recovery process.

In London FTSE 100 Index traded higher 96.26 or 1.85% to 5,310.96 and the pound edged higher to close at $1.5259.

The near-term outlook for both growth and inflation in the UK deteriorated over the past couple of months, according to the Bank of England''s Chief Economist Spencer Dale.

""Inflation has come out a little higher than expected, and the news on VAT in the June budget means that the time it will take inflation to get back to target will be pushed out, and I expect it will be above target until the end of next year,"" Dale said in an interview with the Independent published today.

Further, Dale said the Bank of England would remain wary of rising inflation even if there is evidence that the economy is weakening. ""We know the evils of inflation. It adds to uncertainty, it destroys value of hard-earned cash and reduces the efficiency of the economy. We have to be incredibly vigilant,"" the newspaper quoted Dale as saying.

The UK retail sales grew 0.7% month-on-month in June from a revised 0.8% increase in May, according to data released by the Office for National Statistics today.

Food stores sales were up 0.6% and non-food stores sales climbed 1.2%. The biggest gains were in non-specialized stores at 10.3% and household goods stores at 6.1%, driven by an increase in electrical stores.

On a yearly comparison, retail sales grew at a pace of 1.3% in June, down from the revised 1.7% in the prior month.

Car production in the UK rose 28.6% year-on-year to 117,938 in June, according to a report by the Society of Motor Manufacturers and Traders released today.

""UK automotive production rose in June with steady improvement across the car, commercial vehicle and engine sectors against a weak 2009,"" Paul Everitt, SMMT Chief Executive said. ""Continued investment in new products and technology is helping to sustain growth for the sector while rising demand from export and home markets is maintaining momentum.""

The commercial vehicles production grew 24.9% on an annual basis to 10,656 units in June, while total engine production was up 18.1%. At the same time, total vehicles production rose 28.3% to 128,594.

For the year-to-date period, car production increased 55% compared to the same period of the previous year. During the period, car output totaled 636,660 units.