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UK retail sales increase 2.9%

RETAIL sales in the United Kingdom rose 2.9 percent in June compared to a year earlier and mortgage lending climbed by 8 percent in the month as summer weather smiled on a struggling economy, official reports said yesterday.

The upbeat reports contrast with rising unemployment, which now stands at 7.6 percent and is expected to rise for some time.

Retail sales, which have remained fairly buoyant through the recession, were up 1.2 percent from May, when sales slid 0.9 percent from April, the Office for National Statistics said.

In the three months through June, retail sales climbed 1.3 percent compared to a year earlier, led by a 4.6 percent gain by department stores and other unspecialized retailers.

Sales of households goods fell 6.2 percent, continuing a protracted slump, the agency said.

"Admittedly, sales were lent a helping hand by the good weather," said Vicky Redwood, analyst at Capital Economics, who noted that clothing sales were up 4.7 percent from May.

"Nonetheless, the big picture is still that the high street has been holding up surprisingly well since the start of this year," she added.

The nation basked in above-average temperatures with less than normal rainfall in June. This month, cooler and wetter weather may put a damper on spending.

Inflation has moderated, dropping to 1.8 percent in June, the first time in 20 months it had been below the government's target of 2.0 percent. The Bank of England's base lending rate is at an all-time low of 0.5 percent.

The British Bankers' Association said mortgage lending in June was 2.6 billion pounds (US$4.28 billion), below the average of 3.1 billion pounds in the preceding six months. Gross lending, excluding redemptions, rose for the first time since April 2008 to 7.9 billion pounds, the association said.

Loans approved for house purchases rose to 4.7 billion pounds from 4.1 billion pounds in May, continuing a recovery from the bottom scraped in December. The average of the previous six month was 3.4 billion pounds, the association said.

Banks gained 3.2 billion pounds in personal deposits in June, up from 300 million pounds in May.


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