The Office for National Statistics (ONS) said retail sales fell 0.2% between May and June, confounding forecasts for a rise of 0.4%, while the annual rate of growth slowed to 4%.
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Food sales fell 0.3 percent in June from May, while household goods – which include furniture and appliances – dropped 0.9 percent.
On an annual basis, retail sales rose by 4pc, representing the 27th month of growth.
The pound erased its gain against the dollar after the data were published, and was little changed from Wednesday at $1.5598 at 9:53 am London time.
British retail sales suffered an unexpected dip last month as consumers bought fewer household goods, pushing the annual rate of spending growth for the quarter to its lowest in more than two years.
The euro jumped 0.8 percent to a high of 70.57 pence, from around 70.17 pence before the data was released.
While consumer spending drives around two-thirds of UK output, economists said Thursday’s data did not suggest the start of a sustained slowdown. “Despite June’s dip, the prospects for retail sales and consumer spending look bright for the rest of 2015 and beyond”.
He said: “Consumer confidence was at a 15-year high in June, inflation is negligible, earnings growth is improving and employment has risen appreciably overall, despite a relapse in the latest data”.
Martin Beck, senior economic advisor to the EY ITEM Club, agreed that the figures shouldn’t cause too much concern: As the “sugar-rush” caused by the collapse in oil prices last year is fading, some slowdown in quarterly growth is to be expected.
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The figures come ahead of next week’s initial estimate for overall UK growth in the second quarter, with economists looking for a pick-up on the 0.4% rise in gross domestic product (GDP) reported in the first three months of 2015. Bank of England policy makers see price gains picking up at the end of the year, and Governor Mark Carney said this week the outlook for the first interest-rate increase will be clearer at that time.
