BRITISH retail sales grew at the fastest pace since 2011 in the year to July, official figures showed yesterday, giving further hope that consumer confidence is on the mend.
Shoppers spent £7bn in an average week in July, pushing up sales volumes by three per cent on the year, driven by food sales and internet shopping.
Non-store sales rocketed by 18.1 per cent in the 12 months to July, while food saw an increase of 2.1 per cent. Department store sales increased 3.1 per cent and supermarkets saw a 2.5 per cent increase in volumes.
That firmly outstrips inflation in the sector, which came in at 1.8 per cent in the same period.
“July’s solid increase in retail sales, on top of healthy growth in the previous two months, marks an excellent start to the third quarter. looking through the monthly volatility, the retail sector has built an impressive head of steam,” said economist Nida Ali from the Ernst and Young Item Club. “Since the onset of the financial crisis, sales volumes had broadly flat-lined. However, there has been a clear upturn over the past couple of months suggesting that the retail sector may now be breaking free from this stagnation.”
Very loose monetary policy, and hints that low rates will continue for some time to come, is thought to have encouraged more spending by holding down borrowing costs.
On top of a warm summer, that has boosted consumer confidence.
But analysts warned that weak wage growth will act as a drag on retail sales, despite super-low interest rates.
“The rate at which wages are increasing is still far below the rate of inflation. This implies that households’ real buying power is still falling,” said Daniel Solomon from the Centre for Economics and Business Research.
“Until wage growth picks up or inflation comes down, falling real earnings could act as a fundamental constraint on the retail sector.”