Figures rise but retail sales struggle

The struggle on the high street was underlined today as official figures revealed a greater-than-expected slowdown in retail sales.

Retail sales volumes increased month-on-month by 0.2% in July, compared to a revised 0.8% boost in June, the Office for National Statistics (ONS) said. Economists had expected a 0.4% rise.



Household good stores, clothing and footwear shops, and non-store retailing, which includes internet and mail order sales, all suffered as cash-strapped consumers reined in their spending.



The retail sector has suffered at the hands of a squeeze on household budgets - driven by muted wage growth and high inflation, which was 4.4% in July, up from 4.2% the previous month.

Retailers have had a torrid year with the likes of fashion chain Jane Norman, interior designer Habitat and wine merchant Oddbins falling into administration, while Mothercare, entertainment group HMV and chocolatier Thorntons have all announced store closures.

The ONS said there was evidence that retailers had brought in their summer sales earlier than usual, in May or June, to entice frugal shoppers.



But there was not enough evidence to suggest chains had dragged the sales season on in July as volumes suffered, the ONS added.



Clothing and footwear stores posted a 0.3% drop in sales volumes between June and July, while household goods stores also saw a 0.3% decrease.



Household goods stores, such as Comet, have been among the worst-hit retailers during the spending squeeze as consumers forego purchases of big-ticket items such as fridges, TVs and cookers.



Non-store retailing, which includes internet, mail order and market stall sales, saw sales volumes drop 0.9% month-on-month.



The sub-sector has seen strong growth over the year - with volumes up 16.9% compared to July 2010 - and the ONS put the drop-off in volumes down to a particularly strong performance in June.



Internet and mail order shopping is generally cheaper and consumers have more control over their total spend, as the temptation of impulse purchases is removed, the ONS added.



Internet sales in July amounted to £523.4 million, compared to £395.8 million in the same month last year.



Food stores propped up overall sales volumes in the period, with growth of 0.7% as supermarkets slashed prices to boost trade.



Elsewhere, sales volumes were flat compared to July last year, while sales values increase 0.8% month-on-month and 4.3% year-on-year.

Chris Williamson, chief economist at financial services information company Markit, said weak spending in the third quarter heightened the risk of a double-dip recession.

He said: "People are worried about job security, and incomes are being squeezed by higher prices. After inflation, real take-home pay is falling by over 2% per annum."



He added: "With consumer spending accounting for around two-thirds of the economy, the weak retail sales data suggest that economic growth remained very subdued at the start of the third quarter and highlight how close the UK economy is to sliding back into recession."



Samuel Tombs, UK economist at Capital Economics, said any growth was a relief given the squeeze on household incomes.



But he added: "Looking ahead, we doubt that retail sales will continue to rise given the recent sharp falls in consumer confidence, increases in unemployment and intensifying squeeze on consumers' real incomes."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us