Retail sales post increase for October

UK RETAIL sales in October rose at their fastest annual pace in 17 months, according to official statistics released yesterday.

The Office for National Statistics (ONS) said sales were up 3.4 per cent compared to the same month last year.

But the 0.4 per cent rise on September was less than the 0.7 per cent monthly rise that economists were expecting

According to the ONS, some shoppers brought forward online purchases due to the postal strikes, while an increase in sales of Halloween costumes also pushed the figures up.

Families that bought toys and clothes during the half-term holidays also helped retail sales register their best annual increase since May 2008

The popularity of online shopping continued to surge despite the postal strikes, with non-store retailing posting a 15.8 per cent increase on October 2008.

Jonathan Loynes, chief economist at Capital Economics, said the figures showed that high street spending was holding up despite the recession.

But he added: “With household debt still very high, unemployment set to rise a lot further and a fiscal squeeze looming, the outlook for consumers is hardly rosy”.

Other economists said consumers were bringing forward purchases before VAT is returned to 17.5 per cent at the start of next year.

“We see the latest retail sales data as pretty encouraging and supportive to expectations that the economy will grow in the fourth quarter,” said IHS Global Insight economist Howard Archer.

He added that low mortgage rates and modest inflation were boosting consumer purchasing power.