EURJPY Euro vs Japanese Yen

U.K. retail sales remained unchanged for a second month in September as higher prices and warm weather weighed on clothing sales.

There was no change in the sales volume compared with August, the Office for National Statistics reported Thursday. Economists had forecast a 0.3 percent increase for September following nil growth in August.

Sales excluding auto fuel also remained flat in September. Economists had forecast a 0.2 percent rise.

Retail sales volume increased 4.1 percent year-on-year in September. All store types except textile, clothing and footwear stores showed growth with the largest contribution coming from non-store retailing.

Nonetheless, the pace of growth eased from 6.6 percent in August. Economists had forecast a 4.7 percent annual increase. Also, the 4.1 percent growth was the weakest since June.

Excluding auto fuel, retail sales advanced 4 percent, but slower than the expected growth of 4.4 percent and August's 6.2 percent expansion.

Food and non-food store sales slid 0.2 percent each in September. Clothing and footwear sales dropped 2.8 percent, which was countered by a 3.7 percent increase in household goods sales.

In the third quarter, retail sales increased 1.8 percent from previous three months, the biggest since the fourth quarter of 2014.

It seems unlikely that this strength will last in the face of softer employment and wage growth and higher inflation, Ruth Gregory, a UK economist at Capital Economics, said.

IHS Global Insight Economist Howard Archer, said the quarterly retail sales growth fuels belief that the consumer played a leading role in the apparent resilience of the economy following June's Brexit vote.

However, the positive fundamentals for consumers are now starting to be diluted - particularly by rising inflation - and this seems set to become a mounting problem for the economy over the coming months, Archer added.

The preliminary GDP data is due on October 27.

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