Retail sales fail to improve

Tim Wallace
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NO GROWTH in retail sales by volume was registered in August year-on-year, the Office for National Statistics announced yesterday.

Sales fell over the month, losing 0.2 per cent on July’s volumes.

Internet sales were up and now account for 9.6 per cent of the market. That compares with 8.1 per cent in July, and 7.1 per cent in August 2010.

The previous peak for online shopping came in December of last year when 9.1 per cent of purchases were made over the internet.

Overall, sales of household goods plummeted 4.1 per cent by volume compared with August last year, whilst petrol sales increased 1.6 per cent, year-on-year.

Analysts believe inflation is taking its toll on shoppers. Even though sales volumes stayed static, sales by value increased by 4.7 per cent compared with August of last year.

“High inflation is killing off any hope of a recovery on the high street,” said Samuel Tombs from Capital Economics. “With consumer confidence at exceptionally low levels, house prices starting to fall again and high inflation eroding real earnings, the downturn on the high street seems likely to intensify in the coming months.”

That brings more worries for the state of the wider economy, too.

“As consumer spending accounts for roughly two-thirds of gross domestic product, there is therefore a strong chance that the economy could stagnate or even contract again before the end of the year,” said Markit’s Chris Williamson. “However, with inflation likely to fall next year the squeeze on incomes should ease, so the longer-term outlook is perhaps a little brighter.”