Gloomy figures outlining the Olympic sales slump crushing the high street will emerge this week as retailers count the cost of shoppers engrossed by Team GB's record medal haul.
Official numbers for August are likely to reveal an outright fall in retail sales volumes after slowing to a crawl in July, economists warn. The figures follow disappointing snapshots from the Confederation of British Industry and the British Retail Consortium for the month, and downbeat updates from the likes of fashion chain Next.
The BRC reported its worst month for sales this year due to a slump in non-food purchases, partly a result of many shoppers staying away from London high streets due to concerns over potential transport chaos. Usually resilient online sales also managed growth of just 4.8 per cent, the worst since the BRC began collecting data four years ago.
The CBI also fuelled worries over the health of the high street as retailers reported flat sales and braced themselves for a difficult autumn. Next, the UK's second-biggest retailer, added that sales had been "disappointing" in August and early September. John Lewis partnership was more upbeat when it reported half-year figures last week.
Investec's chief economist, Philip Shaw, who is pencilling in a 0.7 per cent slide in sales, said: "Next's comments on the outlook were worrying in that it said August and September were pretty quiet.
"You can blame the Olympic effect but once you get past that you have to blame something else. What this number won't tell us is whether it is down to the Games or whether there is potentially something more fundamental in play."
The difficult conditions for retailers are likely to have prompted further discounts during the month, feeding into another fall in the Bank of England's Consumer Prices Index benchmark. Analysts expect the CPI to edge down from 2.6 per cent to 2.5 per cent on the month – despite petrol prices heading back towards record levels – as the contrast with rising gas and electricity bills a year earlier flatters the figures.
An ING economist, James Knightley, who forecasts a steeper fall in the CPI to 2.4 per cent, said: "The return of higher petrol prices is not good news for retailers when consumers are already under such pressure."
The latest jobs figures underlined the extent of the wage pain still hitting British households, with average salaries growing by just 1.5 per cent in the year to July – effectively a real-terms pay cut as they trail more than one percentage point behind the cost of living.
The lingering squeeze on consumer wallets and faltering recovery in household spending is almost certain to force the Government's fiscal watchdog, the Office for Budget Responsibility, into a downgrade of its current 0.8 per cent growth forecast this year.