August retail sales are flat
RETAIL sales stalled in August as the growth in high street spending lost some of its momentum, but analysts stressed sales were still on track for growth.
Figures from the Office for National Statistics (ONS) showed retail sales volumes were flat in August compared to a downwardly revised 0.2 per cent rise last month. This took the annual rate of growth in sales volumes to 2.1 per cent compared to 2.9 per cent in July.
Non-food sales volumes, which account for more discretionary spending, dropped 0.6 per cent over the month, while food sales saw a 0.7 per cent rise. Clothing and footwear saw the biggest drop in sales volumes, falling 1.3 per cent.
Analysts said the trend in retail sales volumes has remained relatively resilient over the summer and that August’s weaker figures may just be a blip.
Despite the poor monthly data, volumes in the last three months rose 1.2 per cent quarter-on-quarter, the strongest gain since May 2008.
And volumes in July-August are 0.7-0.8 per cent above the average for the second quarter – another sign that the recession is probably over, according to Citigroup’s Michael Saunders.
Retail sales may also have been boosted over the summer by the sharp drop in sterling, encouraging Britons to holiday at home and foreign tourists to visit the country.
The weaker figures saw the pound lose more than half a cent against the dollar as traders bet that the Bank would keep monetary policy loose for some time.
But a weakening labour market and fiscal consolidation – notably the end of the VAT cut – could prompt sales growth to slow.
Richard McGuire, at RBC Capital Markets was particularly gloomy, saying that the data “does nothing to alter the bigger picture of a consumer that, over the long run, will remain hampered by a slackening jobs market, potentially negative real wage growth and a dearth of credit”.