Retailers reject ONS claim of robust sales

Leading retailers have reac-ted angrily to new figures from the Office for National Statistics which appear to show that the high street has not succumbed to an economic slowdown during the first quarter of the year.

The British Retail Consortium said last night that the ONS claim that the volume of sales in the first quarter of the year were 2 per cent up on the previous quarter – the best figure for four years – was simplistic and represented an unrealistic picture of the health of the economy.

A spokesman for the ONS said: "Underlying growth in retail sales remains robust, driven by the food sector". However, the BRC said the figures disguised the effect of a sales slump in March and did not reflect the fact that sales were "being driven by deep and widespread discounting".

Figures on volume, in any case, do not necessarily reflect the value of sales, the BRC pointed out. Stephen Robertson, director general of the BRC, said: "These figures paint an overly rosy picture. Sales growth is far from robust. The ONS's own figures show non-food prices falling at the fastest rate for more than 20 years.

"With recent retail profit warnings, it is clear that trading is extremely tough but retailers are fighting back by keeping prices low and delivering extra value."

The ONS figures did show discounting by retailers, which are trying to counter weakening consumer confidence and the onset of the credit crunch, with prices down on average by 1.2 per cent compared with a year ago. They also showed that sales volumes fell by 0.4 per cent in March.

Matthew Sharratt, an economist at Bank of America, said: "The extensive discounting does flatter the figures, but the data showed that while consumers may be down, they are not yet out. However, the falls in March show that the overall first-quarter strength could be the last hurrah before there is a slowdown in the second."

Amit Kara, an economist at UBS, said that all the major surveys, including the figures from the BRC, the Confederation of British Industry and the Bank of England, pointed to further weakening in the retail sector.

The BRC's own figures, published last week, suggested retail sales were up 1.1 per cent in the first quarter, with much of the increase simply a result of higher food prices. It also warned sales were down on the previous year for the first time in two years.