Retail growth continues slowdown
Thursday, 14 Sep 2006 10:25
Underlying high street sales slowed in August
Faltering food and drink sales slowed overall growth on the high street in August, government figures have revealed.
The fledgling recovery enjoyed by the retail sector in the spring has faltered in summer, with monthly growth stagnating with 0.7 per cent in June, 0.3 per cent in July and 0.3 per cent again in August.
Figures from the Office of National Statistics (ONS) confirm that underlying retail sales growth slowed down to 1.5 per cent in August, down from 1.9 per cent in July. A year-on-year comparison with August 2005 showed a 4.3 per cent improvement, however.
On a monthly basis, food and drink showed a substantial decline, the biggest since January 2003, of 1.7 per cent. The ONS blamed this on unusually high sales levels in the previous two months, which retail commentators have attributed to sunny weather and the World Cup.
Despite the recent summer spending spree Howard Archer of economic research firm Global Insight has warned that consumers will begin to feel the pinch as winter draws in.
"In addition to higher interest rates, the consumer faces soaring utility bills, moderate earnings growth, an increasing tax burden, rising debt levels and serious pension concerns," he said.
"These headwinds are expected to increasingly outweigh the support coming from high employment and the currently buoyant housing market."
His predictions about the impact of today's results on future Bank of England interest rate decisions are in line with those delivered by other financial commentators, foreseeing a November rate rise before a long period without any further changes.