Hot weather and World Cup give surprise boost to retail sales

LONDON, July 24 (Reuters) - British retail sales rebounded unexpectedly in June as shoppers upped their spending on air conditioning and clothing, according to data which added to signs of a pickup in the economy during the warmer weather and soccer World Cup.

Sales volumes in June rose 1.0%, the Office for National Statistics said on Friday, well above economists' forecasts for a 0.3% fall in a Reuters poll.

Sales rose 1.2% in monthly terms in May, while April's sharp 1% drop was revised to a fall of 0.7%.

Compared with a year earlier, volumes were 4.2% higher, against economists' expectations of a 2.3% rise.

The data chimed with a recent survey of improved sentiment among consumers despite concerns about the war in Iran.

British inflation slowed in June, as motor fuel and food prices fell during a brief ceasefire in the Gulf conflict, while the downturn in the jobs market has shown signs of stabilising.

"June's increase in retail sales volumes suggests that consumers kept on spending despite the rise in energy prices since the war in Iran began," said Ruth Gregory, deputy chief UK economist at Capital Economics.

"But with the drag on households' real incomes set to intensify, we don't expect this resilience to last."

Other recent updates from major British retailers have painted a more mixed picture of consumer demand. Supermarket group Sainsbury's said trading in its third quarter had improved, helped by the heatwave, while electricals retailer Currys reported "very solid" trading, with the soccer World Cup spurring demand for televisions and the hot weather causing a spike in demand for fans and air conditioning products.

However, Sports Direct owner Frasers warned it was still feeling the impact of tough trading conditions, subdued consumer confidence and industry-wide excess inventory levels.

(Reporting by Suban Abdulla; additional reporting by James Davey; editing by William James)