Retail sales rise again but forecourts apply the brakes

 

Click to follow
The Independent Online

Retail sales edged up in July as shoppers took advantage of high street promotions to splash out on electrical appliances and furniture, according to official figures.

The Office for National Statistics (ONS) said retail sales by volume rose 0.1 per cent month-on-month in July – a reversal of the unexpected  0.1 per cent fall in June.

Sales at household goods stores soared 13.4 per cent year-on-year in July as a raft of discounts and a stronger housing market boosted demand.

However, the overall rise in retail sales was lower than the 0.4 per cent increase expected by most economists, with a decline in fuel sales holding back progress.

Paul Hollingsworth at the consultancy Capital Econ-omics said the weaker than expected figures were “nothing to worry about”. He added: “The prospects for retail spending remain bright. Real pay is rising strongly, unemployment is still low, and the recent fallback in the oil price and the forthcoming cut to gas prices should give households’ discretionary spending power another healthy boost.”

The ONS reported that, on an annual basis, sales were  4.2 per cent higher in July, marking the 28th month in a row of year-on-year growth, the longest run for more than seven years.

The underlying picture was also healthy, with quarter-on-quarter sales up by 0.5 per cent, although falls in prices on the high street meant that sales by value dropped by 0.2 per cent between June and July.

Prices were slashed across the household goods and furniture sector in the summer sales, with prices down by  2.4 per cent month-on-month in July.

This helped household goods sales to rise 3.6 per cent by volume between June and July, with electrical appliances, furniture and lighting items among those selling well.

Consumer spending power has been boosted by record low interest rates and by wage growth outstripping inflation, with the rate as measured by the consumer prices index currently standing at 0.1 per cent.

Average prices fell year-on-year in July at all retailers, with the exception of  clothes shops. The steepest drop was in petrol stations, at 10.9 per cent, according to the ONS. It added that online sales remained unchanged between June and July, but were 13 per cent higher year-on-year.

John Hawksworth, the chief economist at the professional services firm PwC, said: “Overall, the figures suggest that consumer spending will remain a positive contributor to economic growth in the third quarter, but at a more moderate pace than earlier in the year.”

Comments