Deep discounts mitigate sharp retail sales fall

Ben Southwood
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RETAILERS were hit by bad weather in June, as consumers bought less food to barbecue and spent less than expected on the Queen’s Diamond Jubilee, according to data released by the Office for National Statistics (ONS) yesterday.

The ONS’s retail sales index inched up 0.1 per cent by volume in June, compared to May, but slipped 0.5 per cent in value.

Sales were down 1.4 per cent by value in the second quarter in comparison to the first, according to the index, but up 1.8 per cent on the same three months in 2011.

“The wettest June on record posed a major challenge for retailers. These figures confirm our own showing that there was only a mild-boost from the Jubilee but it did stop June being significantly worse,” said Stephen Robertson, director general of the British Retail Consortium.

But much of this dip was down to falling oil prices, which gave cash-strapped consumers a boost through lower fuel prices. Excluding automotive fuel, the index for sales by value climbed 2.9 per cent in June compared to June last year, and edged down just 0.1 per cent compared to May.

“To combat the weather, retailers discounted heavily over the month. They raised prices by a mere 0.3 per cent between June 2011 and June 2012,” said Daniel Solomon at the Centre for Economics and Business Research, “Their efforts were so substantial that they contributed noticeably to the large 0.4 percentage point fall in year-on-year inflation in June.”