Retail sales jump surprises analysts

Last Modified: 21 Aug 2008
Source: ITN

Retail sales rose unexpectedly last month despite shoppers facing the stiffest price rises for a decade.

The Office for National Statistics (ONS) said July retail sales volumes were 0.8 per cent higher than in June, and 2.1 per cent compared to a year ago.

The data confounded analyst expectations of a 0.3 per cent monthly drop in line with a wider spending slowdown.

Last month's retail price deflator - a measure of how high street prices are changing as a whole - also reached 1.6 per cent in July, the highest figure since July 1998.

Rocketing food prices were the main driver, helping to send shoppers off in search of more bargains at the discount chains.

The British Retail Consortium (BRC) expressed surprise at the sales rise, saying it painted a more positive picture than most retailers would recognise. It was in stark contrast to a fall of 4.3 per cent the previous month, which was revised from 3.9 per cent and already the biggest fall since records began in 1986.

The BRC took the opportunity to unveil a series of proposals aimed at helping the sector, including lowering commercial property costs through tax incentives, limiting minimum wage rises to encourage employment in the sector, and helping to cut household bills through an energy efficiency drive.

Director general Stephen Robertson, who recently published BRC figures for July showing a 0.9 per cent fall year-on-year, said of the ONS's data: "Few retailers will recognise this positive picture.

"There is no evidence that fundamental conditions are improving for customers or retail businesses. Consumer confidence remains low, unemployment is rising and the housing market weakening.

"We respect the ONS's process but this report doesn't seem to reflect the current retail reality."

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