ONS: UK retail sales fall 0.2% in August

| September 15, 2011
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The Office for National Statistics (ONS) has today revealed UK retail sales fell by 0.2% in August after riots earlier in the month affected trade.

The fall followed slower growth in the previous two months after sales rose just 0.2% in July and 0.8% in June.

In the meantime, food sales were also down – an area which has not particularly suffered as consumers rein in their spending.

However, it appears consumers are being cautious after food sales noted a 0.3% fall in August compared with growth of 0.7% in July.

Households continue to be squeezed by higher inflation, rising unemployment and sluggish wage growth.

The ONS revealed earlier this week that inflation rose further in August, to 4.5% on an annual basis.

Consumer spending is a key driver of economic growth and as a result of today’s figures, a further slowdown is anticipated for the third quarter.

Several retailers have recently reported tough trading conditions. Today, Kesa, the parent company of electrical retailer Comet, revealed a sharp fall in sales.

Total revenue in the previous three months fell by 9.8% on a like-for-like basis while sales slumped almost 22% after Kesa blamed weak trading.

However, the company said the fall was expected and compares with strong sales in 2010 due to the football World Cup and the popular launch of Apple’s iPad.

Yesterday, the John Lewis Partnership, which is regarded as a barometer of British retailing, has reported a marginal increase in sales and said trading conditions are “extremely challenging”.

The renowned employee-owned chain, which owns the Waitrose supermarket chain, said sales rose 1% on a like-for-like basis in the six month period to 30 July.

However, across the group, first-half pre-tax profits slumped by 18% to £90.4 million.

In addition, last week, Home Retail Group announced a drop in sales at both its Argos and Homebase chains, while electrical goods chain Dixons Retail posted a fall in sales.

Accountancy firm BDO recently warned Britain’s retailers should prepare themselves for some tough times as pressure builds on consumers in the run-up to Christmas.

However, there was some good news today after Kingfisher, the owner of DIY chain B&Q, announced plans to create more than 1,200 new jobs through a major expansion of its trade supply arm, Screwfix.

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