Retail sales in Britain unexpectedly fell sharply in August, the pound fell against the euro

Retail sales in Britain fell by 0,5%. This news was very unexpected and disappointing. Analysts had expected sales increase in August on 0,3%, despite the excellent statistics of July. Incidentally, the preceding data were also revised to a demotion. The revised data showed growth in the preceding month was 0.8%, down 1.1%. Generally speaking, ONS revised the baseline period from 2005 to the year 2006, which greatly influenced the data. Total annual sales growth was also revised down, showing an increase is now only 0,5% of sales compared with August of 2009. The very same index for the third time demonstrates the increasing volatility in achieving the same level close to the maximum. That is, the British are very cautious in regard to further increase the cost, especially with such "invisible" progress in the labor market, which highlighted yesterday's report.
Simultaneously published data on consumer expectations of inflation. According to a joint study by the BOE and GfK compared to May and August showed the growth projected inflation to 3,4% compared to 3,3% in May. The estimate of the current inflation rate remained unchanged 3,6%. Actual CPI during this period fell from 3,4% to 3,1%. Increased number of respondents who indicated that the acceleration of inflation will undermine the recovery. The challenge for the Bank of England is complicated. After all, they now have to contend not only with the apparent slowdown in the economy, but at the risk of get out of control inflation expectations. A modest consolation is the fact that the current and expected inflation closer, that is, gone are the days of great uncertainty, but the level of this balance is clearly more than comfortable for the Bank of England, exceeding 3%. Sterling after the news went to the downside against the dollar and euro, but the overall weakness of the dollar today does not give the pound will fall, he soon returned to the region above 1.56. EUR / pound rose to 0.84, which is the maximum level for six weeks.

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