Retail sales fall less than expected

City A.M. Reporter
Retail sales fell slightly less than expected in August, but the underlying trend remained flat, as consumers continued to rein in spending at a time of great economic uncertainty, official data showed.

The Office for National Statistics said sales volumes including automotive fuel fell 0.2 per cent last month, slightly better than forecasts for a dip of 0.3 per cent.

Sales volumes did not grow at all on the year - the weakest since December 2010.

Underlying sales in the three months to August rose 0.3 per cent, and have been virtually flat for most of the last year.

Britons have suffered the biggest drop in incomes in thirty years, as the economy struggles to recover from its deepest downturn in decades, forcing consumers to cut spending.

The ONS said it was difficult to quantify the effects of widespread rioting in August, noting that some retailers had suffered due to store closures, while others had picked up trade as people changed their shopping behaviour.

Excluding fuel, retail sales fell by 0.1 per cent on the month and on the year. The ONS said that retail prices were 4.7 per cent higher than a year ago, the highest rate of retail price inflation since July 2008.

The acceleration reflected the biggest annual jump in clothing and footwear prices since 1991.

Rising inflation and the threat of job cuts as a result of hefty public spending cuts have depressed consumer morale to its weakest since Britain was in the depths of recession.

Even discount retailer Primark said this week it had taken a hit from the summer sales starting early and from having to cut prices more than previously.

Household goods retailer Argos said sales in its second quarter dropped almost nine per cent as Britons shied away from buying consumer electronics.

Department store chain John Lewis - a bellwether of wealthier shoppers - reported an 18 per cent drop in first-half profits, due to discounting and higher investment.