August retail sales are flat

IL s

IL 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.<br /><br />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. <br /><br />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. <br /><br />Analysts said the trend in retail sales volumes has remained relatively resilient over the summer and that August&rsquo;s weaker figures may just be a blip. <br /><br />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. <br /><br />And volumes in July-August are 0.7-0.8 per cent above the average for the second quarter &ndash; another sign that the recession is probably over, according to Citigroup&rsquo;s Michael Saunders.<br /><br />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.<br /><br />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.<br /><br />But a weakening labour market and fiscal consolidation &ndash; notably the end of the VAT cut &ndash; could prompt sales growth to slow.<br /><br />Richard McGuire, at RBC Capital Markets was particularly gloomy, saying that the data &ldquo;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&rdquo;.<br />