Retail sales return to growth

Retail sales returned to growth last month after stores started their summer sales early to attract cautious consumers, official figures revealed today.









Volumes rose 0.7% month-on-month in June, the Office for National Statistics said, although this only partly offset a 1.3% decline the previous month.



The moderate improvement in sales came as retailers such as Marks & Spencer and other clothes chains started their summer sales early, while home furnishing stores also put on big discounts.









The discounting helped household goods stores to increase their volumes by 2.6% compared to the previous month, while clothes sales were up 0.6%.

Food retailers, including supermarkets, saw their volumes decline by 4.2% on the previous year, the largest fall since records began in 1988.



And there was more bad news on inflation as the ONS indicated that food prices were up 5.8% year-on-year - the highest since March 2009.



The figures also revealed that non-store sales, including the internet, hit record highs, underlining the squeeze on the high street, which has been under great pressure in recent months as consumers, whose wages are failing to keep pace with soaring inflation, rein in spending in the face of fears over unemployment and the faltering economic recovery.



The early discounting comes after retailers such as department store chain TJ Hughes and fashion specialist Jane Norman recently fell into administration as sales fell, while Mothercare, entertainment group HMV and chocolatier Thorntons have all announced store closures.



A recent report by Ernst & Young showed that retailers have issued 26 profit warnings in the first half of 2011 - more than the whole of the previous year.



And economists have warned that July's sales are likely to be weaker because some of the summer sales that would normally have taken place during the month have already taken place in June.







Labour's shadow chief secretary to the Treasury Angela Eagle said: "These figures confirm the disappointing news from the high street we have seen in recent months. As the ONS has said, the underlying picture is flat with a very modest year-on-year increase of just 0.4%.

"We need urgent action to boost jobs and consumer confidence and get our economy moving again.



"Temporarily reversing January's mistaken VAT rise would ease the growing squeeze on families and pensioners, give this stalled economy the jump-start it urgently needs, and so help get the deficit down for the long term."

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