Retail sales in surprise August fall

Written By Unknown on Kamis, 19 September 2013 | 16.50

19 September 2013 Last updated at 05:24 ET

Retail sales volumes fell 0.9% in August according to the Office for National Statistics (ONS) - a surprise for analysts who had expected a rise of around 0.4%.

The ONS said consumers reined in spending, particularly on food, compared with July.

But sales volumes were still 2.1% higher than in August last year, when the Olympics hit spending.

Non-store retailing, which includes online shopping, saw the most growth.

But in-store retailing still dominates the sector. According to the ONS, out of every pound spent in UK retail, 83 pence is spent in food and non-food shops.

The figures are based on a monthly survey of 5,000 UK retailers, including all large retailers who employ 100 people or more.

Retail sales are seen as an indicator of consumer confidence, and therefore the economy as a whole.

Spending concern

The retail sector accounts for around 6% of the UK economy.

The economy grew by 0.7% in the second quarter of the year, according to the latest estimates.

Earlier this month, the OECD, an international organisation, said it now expected the UK to grow by 1.5% this year, up from the 0.8% growth it previously forecast.

But some retailers have expressed concern at the strength of consumer spending.

Food sales fell by 2.7% in August compared with July. Last week supermarket Morrisons said higher levels of spending in London were not reflected in other parts of the country.

David Tinsley, UK economist at BNP Paribas, described the retail sales figures as "one of the weakest prints on the economy for some time".

"It is probably a sign that upbeat expectations were getting a little out of whack with what the economy is capable of delivering," he said.

"If there is an ex-post rationale for the decline in sales, it seems to be largely down to the weather. Food sales were exceptionally strong in July... as the temperature improved markedly. While August was also pleasant, that level of sales was probably difficult to sustain."

But he added that he was still broadly optimistic about the prospects for the UK's economic recovery.

"The economy's progress is not going to be a one-way progression to soar-away data. But the picture of an underlining improvement remains intact," he said.


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