Early xmas deals boost retail sector

Early pre-Christmas promotions gave a surprise lift to British retail sales in October, driving up volumes at their fastest pace since June, official data showed on Thursday.

The Office for National Statistics said sales volumes including automotive fuel rose 0.6 per cent last month after a 0.5 per cent rise in September and confounding forecasts for a fall of 0.2 per cent.

On the year, sales rose 0.9 per cent, also well above expectations for a flat reading.

The ONS said sales volumes were driven higher by widespread discounting by retailers in the run-up to Christmas.

The figures highlight the measures retailers are having to take to lure in cash-strapped Britons, who have been hit by the biggest squeeze on incomes in 30 years.

The ONS said there had been a particularly strong rise in sales of computers, telecoms, sporting goods, toys, watches and jewellery.

These stores come under the 'other stores' category, which recorded its highest monthly rise in sales since July 2010.

"Feedback from retailers was that growth in sales came as a result of pre-Christmas sales and promotions across the board," the ONS said.

It added this was most evident among food retailers and tallied with inflation data earlier this week, which showed that a supermarket price war contributed to a slowdown in inflation.

Excluding fuel, retail sales rose 0.6 percent on the month and were up 0.9 percent on the year.

A survey overnight which showed consumer morale fell to a record low in October.

Bank of England policymakers said on Wednesday that weak consumption was one of the main reasons for the country's lacklustre recovery, but that spending was likely to pick up towards the end of next year when inflation is expected to be much lower.

Recent surveys have shown underlying retail sales are weak, and the British Retail Consortium warned that a fall in its October survey of retail sales augured badly for the crucial Christmas trading period.

Mother and baby products retailer Mothercare Plc slumped to a first-half loss, it said on Thursday, while clothing retailer French Connection reported lower third-quarter profits this year than last year.

In a sign that lower prices can still pull in cash-strapped consumers, Asda, the British arm of US retailer Wal-Mart Stores and Britain's second-biggest supermarket group, said this week its pledge to be cheaper than rivals helped sales grow faster in the third quarter.