Surprise rise in shop sales

Retail sales staged a surprise revival last month, official figures showed today.

Sales volumes in July were 0.8 per cent higher than the previous month, the Office for National Statistics (ONS) said. The fall was in stark contrast to a 0.2 per cent fall expected by the City, and the record 3.9 per cent fall reported in June.

The biggest contribution to July's rise was a 2.8 per cent rise for "other stores", which includes sales of computer games and mobile phones. Clothing and shoe shops also saw a 1.5 per cent improvement compared to previous month.

Food sales were 0.3 per cent ahead in July compared to June. The ONS said there was evidence of growth in the discount food sector - which includes chains such as Aldi and Lidl. This is consistent with recent supermarket industry data which showed the discount sector enjoying its highest market share on record.

Household good shops - which includes furniture and electricals - also rose 1.6 per cent.

Sales for non-store retailing and repair, including internet and mail order, were 0.1 per cent down.

The only other sector showing a decrease was non-specialised stores - mainly department stores - which saw sales volumes fall 2.6 per cent last month.

Compared to July last year, retail sales volumes were 2.1 per cent ahead, the ONS said. The average weekly value of sales in July was £5.2 billion, 3.8 per cent higher than last year.

The rise also contrasts with data from the British Retail Consortium for July, which showed a 0.9 per cent drop on a like-for-like basis compared with a year ago.

The ONS's 3.9 per cent sales fall reported for June, which was the biggest drop since records began in January 1986, has actually been revised downward further to a 4.3 per cent dive, the organisation said.

The slump was consistent with a widespread consumer slowdown as households wrestle with soaring food and energy prices.

July's unexpected rise will add to the uncertainty regarding the Bank of England's next interest rate movement.

Rate-setters are battling with runaway inflation, which reached 4.4 per cent in July, as well as a slowing economy.

For the three months ending July, ONS data showed retail sales volumes were 0.8 per cent better compared to the previous three months. The main driver was from clothing and footwear shops, which saw sales rise 3.1 per cent.

July's price deflator, which measures whether prices are moving up or down, was 1.6 per cent higher than a year ago. This was last as high in July 1998.

The main driver was food inflation, which was 6.1 per cent in July, the highest reading since March 1992.

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