High street sales volume accelerates to record level

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The Independent Online
THE VOLUME of retail sales set a new record last month, their annual rate of increase rising to 3.7 per cent after a summer dip.

Competition on the high street meant the rate of growth of cash sales was slower. Many City economists concluded the figures raised no concerns about inflation and suggested there was no urgent need for another interest rate rise, although the buoyant figure helped to take share prices lower. The volume of retail sales increased 0.5 per cent in September, according to official statistics released yesterday. August sales figures were revised up, a drop of 0.4 per cent becoming a smaller decline of 0.1 per cent.

The increase in the three months to September compared with the previous three months was 0.9 per cent, up from 0.6 per cent, suggesting the underlying rate of growth has picked up despite April's tax increases and the weak housing market.

The gains were not evenly spread. Clothing and footwear sales increased 1.2 per cent in the month and sales of household goods were up 0.9 per cent.

Ian Sheperdson, an economist at Midland Global Markets, said: 'Yet again the strongest sales were in the categories where price competition is fiercest - clothing and household goods. Consumers' insistence on value for money has not diminished.'

Comparing sales volumes for July to September with the same period a year ago, food and clothing sales have seen the strongest trend growth, with increases of 5.7 and 5.4 per cent respectively. Simon Briscoe, UK economist at SG Warburg, said the headline figure was driven by the strength of food sales.

Non-food sales volumes were only 0.1 per cent higher in July- September than in the previous quarter. According to the British Retail Consortium, the trade body representing the retail industry, do-it-yourself sales were stuck around last year's levels and specialist retailers continued to lose market share to supermarkets.

The BRC said retailers were cautiously optimistic about Christmas trading, especially with the Sunday trading law clarified.

Richard Brown, deputy director of the British Chambers of Commerce, said aggressive discounting was a matter for concern. 'Retail sales growth is being bought at the expense of profitability,' he said. 'This hits small retailers who cannot sustain such tight margins over a long period.'

The British Chambers of Commerce said the service sector as a whole was slowing down. Its quarterly economic survey, published today, reports a drop in confidence and investment intentions among service sector companies, although the outlook for manufacturing is good.

(Graph omitted)