Retail sales in surprise 0.3% rise

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The Independent Online

Retail sales rose by 0.3 per cent last month in the first positive growth for Britain's battered high street since August, official figures revealed today.

The unexpected rise between October and November came as online shopping boomed and food and household sales soared amid a retailer price war.

The Office for National Statistics (ONS) sales volumes data continued to confound experts as it once more defied gloomier polls from the sector.

Experts had been forecasting a seasonally-adjusted fall of at least 0.4 per cent from retailers in a month that saw well-known names MFI and Woolworths collapse into administration.

The ONS data have consistently surprised on the upside, while other research has suggested a far worse picture in the retail sector. Figures yesterday indicated high street sales had fallen to their weakest for 25 years, according to the latest CBI poll.

But today's ONS data showed the steepest fall in three-month sales within department stores since records began 22 years ago in a sign that all is not rosy among retailers even in the more upbeat official statistics.

Sales of general stores, including department stores, dropped 3.8 per cent in the three months to the end of November compared with a year ago.

A further indication of retail pain came as the ONS said that sales rose 1.5 per cent year-on-year in November - the lowest annual rate since February 2006.

The ONS also revised sales volume figures downwards for the previous two months, with a fall of 0.3 per cent in October against the 0.1 per cent previous estimation and a drop of 0.6 per cent in September compared with its initial 0.5 per cent fall.

David Page, economist at Investec Securities, said high street activity was "bleak".

He added: "December's ever more aggressive discounting and the cut in the main rate of VAT may boost December's sales. But this could be at the cost of the usual period of discounting post-Christmas. We fear for the retail outlook across the first quarter of 2009."

However, today's data showed retailers rung up sales worth £5.8 billion a week last month, a 2.9 per cent rise in sales values against last November.

It also highlighted the rise of internet shopping, revealing around £220 million of online sales a week during November - which now represents 3.8 per cent of total retail sales, up from 2.8 per cent in June.

Economist Howard Archer, of IHS Global Insight, said the increase in internet sales helped boost the overall data and provides an explanation of the difference between today's data and recent gloomy high street survey results.

Desperate price-cutting among retailers was also helping to lure in cash-strapped shoppers, according to Mr Archer.

Food stores, which have been slashing prices, saw sales volumes rise 0.2 per cent between October and November, with a 3.9 per cent hike from household goods outlets.

"Despite the ONS data, the latest indications are that retailers are having a torrid time," he said.

Retail shares, meanwhile were suffering again on the London market.

Marks & Spencer saw its shares fall 4 per cent at one stage today, while Next and B&Q owner Kingfisher were also in the red.

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