Retail sales with auto fuel for the month of March showed 0.7% drop, compared to both prior and expected readings of 2.1% and -0.6% respectively, where the annual reading edged down 0.5% from a revised of 2.5%. The fall is largely attributable to the drop in clothes which retreated 3.1%, while household goods dropped 6.2%. The reading excluding auto fuel also dropped 0.8% from a revised of 2.1% while annual reading rose 0.4%, after the prior reading was revised down from 3.3% to 3.2%. It seems that retail sales were affected by the high inflation and unemployment, according to data released this week. CPI for the year ended March lingered at 2.8%, to remain close to the BOE’s upper limit inflation target of 3%. On the other hand, ILO unemployment rate for the three months ended February rose to 7.9%, the fastest pace in more than a year, recording a rise of 70,000 to 2.56 million, from both prior and expected readings of 7.8%. Employment edged up 2,000 to 29.7 million, marking the first drop since October 2011. The same report reflected the weakness in consumer spending as average weekly earnings surged just 0.8% in the quarter through February from a year earlier after the prior 1.2% increase. The British economy, meanwhile, is in the throes of experiencing a triple-dip recession after GDP for the last three months of 2012 showed a drop of 0.3%, from an expansion of 0.9% in the third quarter. This week, the IMF cut its projections for the country`s economic growth in 2013 and 2014 to 0.7% and 1.5% respectively, from its January forecasts of 1.0% and 1.9% while it noted the recovery was “progressing slowly.” The BoE decided this month to leave both interest rate and APF quantity unchanged amid a continued split among policymakers regarding stimulus as Mervyn King, Paul Fisher and David Miles resumed their call for adding an extra 25 billion pounds to QE while the majority preferred a hold. Following the release of the retail sales figures, the cable trade around 1.5225, from a high of 1.5266.
EasyForexNews Research Team