UK retail sales up in August
Figures published by the Office for National Statistics (ONS) have revealed that UK retail sales increased in August, raising questions about the consumer slowdown.
Last month, sales on the High Street rose 1.2% to stand 3.3% higher than 12 months ago. A fall of 0.5% had been predicted by analysts following a series of grim economic news.
However, a surprising boost was experienced in August and the rise was attributed to summer promotions and back-to-school shopping despite the wet weather during the month. However, food sales fell 0.2%, according to the ONS.
Analysts had predicted that consumers would rein in spending following fears of a recession and future job security after employers’ organisation, the CBI, forecasted that unemployment in Britain will rise by almost half a million to 2.12 million by the end of 2009, a level not experienced since 1997.
Meanwhile, the British Retail Consortium had predicted a gloomy outlook for retailers after inflation surged and bad weather would dent consumer spending.
However, while the monthly and annual figures from the ONS were positive, sales in the three months to August fell 0.8% compared with the previous three months – this represents the largest fall for 18 years.
Earlier this week, the ONS revealed that the UK’s annual rate of inflation reached a 16-year high of 4.7% in August, up from 4.4% the previous month. The figure is more than double the bank’s target of 2%.
Rising food and energy bills are driving inflation upwards and will push it over 5% this year, according to Mervyn King, the Bank of England’s Governor.
As a result of higher inflation, the Bank of England has not been in a position to cut interest rates, which have been on hold at 5% since April.
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