CPI inflation

Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics said: "July’s retail sales figures show that consumers have been protected from the immediate fallout of the Brexit vote, but with firms intending to stop hiring and inflation set to soar, the high street is set for a tough year. Sales volumes rose in all major categories, although the 3.5% leap in clothing sales clearly reflected a rebound from weakness in June due to heavy rainfall. Retailers also had to continue to cut prices rapidly—the retail sales deflator, excluding fuel, fell 1.7% year-over-year—in order to get consumers to open their wallets.”

Ruth Gregory added: "We would be wary about reading too much into the jump in July’s figures. The month-on-month data tend to be fairly volatile and temporary factors such as July’s warm weather seems to have boosted spending. Meanwhile, it will probably take some time before we see the full effect on the consumer of a weaker labour market and an increase in prices. So it would be fairly surprising if household spending growth didn’t slow at all in the aftermath of the leave vote.”

But at least Ms Gregory finished on a more positive note. She said: “Nonetheless, today’s figures provide us with reassurance that we won’t see a material collapse ahead.”