This wasn’t supposed to happen: figures out today from the Office of National Statistics show that high street sales jumped by 0.8% in July, defying predictions of a 0.3% drop – despite the fact that price inflation is at its highest level for ten years. Retail sales are now 2.1% up on last year – a not insubstantial amount, even if it is the slowest annual growth rate for a while. And it’s not exactly as though we’ve been basking in the warm glow of beautiful summer sunshine...
After a fall of 4.3% in June, most analysts were predicting another slide this month, with rising prices (there was a 1.6% increase across the board, including a whopping 6.2% jump in food prices) and gloomy prognostications about the economy depressing consumer confidence even further. Instead, it appears we’ve been ignoring all this and spending all our money regardless – sales were up across the board, including household goods and clothing. Discount supermarkets are doing particularly well: TNS reckons the combined market share of Aldi, Lidl and Netto has hit an all-time high of 6.1%.
However, the City finds it so implausible that it could have been so far out with its estimates that people are casting aspersions on the validity of the ONS stats. The sales figures have been so volatile in recent months that some of these analysts reckon the metrics must be wrong – particularly since the figures differ markedly from those of other employer groups. And to be fair, the rise in sales last month doesn’t seem to tally with the view of most retailers we speak to.
The British Retail Consortium certainly isn’t convinced – it’s just published an open letter to the Chancellor Alistair Darling, urging him to intervene in support of the sector. Its proposal outlines six ‘strategies for success’ through which the Government could make life easier for retailers, which include pushing down commercial property costs (partly by re-introducing tax relief on empty properties); boosting employment, by keeping a cap on the minimum wage, and restoring consumer confidence by cutting household bills and promoting energy efficiency. It even wants him to revisit the zero VAT rating of children’s clothes, to reflect the fact that we’re spawning bigger kids than we used to.
We’re inclined to agree that these ONS figures look a bit too good to be true, given all the negative economic data flying about at the moment – but never underestimate the British love of shopping... Either way, it’s not going to make it any easier for the Bank to cut interest rates any time soon...
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