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Analysts at TD Securities note that the UK retail sales surprised to the upside at 0.7% m/m, ahead of consensus of +0.2% and far better than the hefty decline that this week’s Visa data had suggested.

Key Quotes

“Details showed food store sales up only 0.1%, with non-food store sales rebounding from last month and driving most of the gain at 0.7%. Clothing/footwear sales bounced back quite strongly at 1.5% (-0.8% last month), likely supported by the discounting that we saw in yesterday’s CPI data, where the June-July 2-month drop in clothing prices was the largest since 2012.”

“Overall the trend in consumer spending still looks pretty strong, and off to a good start for supporting Q3 growth. And this retail data doesn’t include things like bars/restaurants and travel/tourism that will support services activity more broadly in the GDP data.”