Retail sales for November show surprise turnaround

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The Independent Online

Shoppers went on an early Christmas spending spree last month, according to official figures yesterday that confounded forecasts of a fall and sent the pound to a fresh 12-year high against the dollar.

Shoppers went on an early Christmas spending spree last month, according to official figures yesterday that confounded forecasts of a fall and sent the pound to a fresh 12-year high against the dollar.

The volume of sales through high street tills rose by 0.6 per cent in November, a turnaround from the 0.5 per cent drop in October. It took the annual rate of growth to 6.1 per cent, the Office for National Statistics said.

The sign of robust spending capped a week that has seen higher inflation, higher pay deals and record employment, dampening hopes that interest rates have peaked.

"Never underestimate the UK consumer," John Butler, a UK economist at HSBC, said. "There is a little more 'legs' left in the consumer and we still think the next move in rates is up."

The pound jumped more than two cents to $1.9553, its highest since September 1992, but later fell to about $1.9323.

But the figures were in stark contrast to a survey from the British Retail Consortium, which showed sales falling 0.2 per cent last month, and a report from the CBI warning that retailers expected a poor Christmas on balance.

The ONS said sales increased in all sectors apart from several large toy stores and some sports shops. The growth was led by household goods stores - a favourite at the festive season - with 1.9 per cent monthly growth, followed by department stores with 1.1 per cent.

But the volume of sales was won at the expense of prices as the value of sales grew at an annual rate of just 4.2 per cent, an 11-month low.

Although this could threaten shops' profit margins, analysts said retailers were also benefiting from the global deflation in goods prices thanks to the growth of low-wage economies in Asia.

Internet retailers reported strong growth on a year ago, the ONS said. This was echoed by a report forecasting that online shopping would break all records this Christmas.

Royal Mail predicted that £4bn would be spent online in the seven weeks up to Christmas, a 40 per cent increase on the spend online in November and December last year and 6 per cent of total retail spending.

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