Surprise rise in high street sales

a�?Surprise

According to the Office for National Statistics (ONS) there has been a slight increase in high street sales in July.

Analysts had predicted a fall of 0.2% after a 4.3% drop in June as consumers cut back on spending due to rising mortgage payments and higher food and fuel costs.

However, sales of household goods, clothing and footwear were all up, according to the ONS data.

The ONS said retail sales were up 0.8% last month, reversing a fall of 3.9% in June. However, the annual rate of growth was 2.1%, the lowest in two years.

The rise in sales came despite an average 1.6% increase in prices, the sharpest gain for a decade, which was driven by a 6.2% rise in the cost of food, the sharpest rise for 16 years.

However, the surprise rise in sales have highlighted concerns by retail experts who believe many shops are continuing to struggle as consumers rein in their spending due to the credit crunch.

The ONS data has raised questions and many have suggested it is not plausible that such dramatic monthly swings could reflect changes in the real economy.

Economists are forecasting that consumer spending is set to fall in 2009.

A recent report from TNS Worldpanel illustrates that consumers in the UK continue to cut back as day-to-day living costs continue to rise.

The figures show that bargain hunters have helped sales at discount stores such as Aldi, Lidl and Iceland soar.

According to Ed Garner, TNS director of research, the new breed of discount shoppers are mainly younger households with children, whose finances have been stretched the most.

It was also revealed that consumers are shunning more expensive shops as data showed Marks and Spencera��s share of grocery sales had fallen 2.1% in the four weeks to 8 August, while Waitrosea��s market share grew by 0.4%.

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