Retail sales slacken as shoe prices prompt consumers to vote with feet

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The Independent Online
High street sales fell last month, mainly due to a 12 per cent nosedive in sales of shoes. However, while retail sales have followed a choppy course during the past few months, they remain on a firm upward course. Angela Knight, Treasury minister, said Britain's high streets were "bustling".

The volume of sales climbed 0.8 per cent in the three months to September. At 3.4 per cent year on year, their growth has returned to the fastest pace since the end of 1994.

The value of sales through the nation's tills was pounds 15.7bn, 6.6 per cent higher than last September.

Recent ups and downs have been due mainly to fluctuations in clothing and footwear sales. The number of pairs of shoes sold fell 12 per cent in September to a level 11 per cent lower than a year earlier.

Both June and August were strong months for clothing and footwear, but some analysts suggested consumers had voted with their feet after a record increase in prices for these items last month.

The British Retail Consortium agreed that shoe sales had gone into reverse in September, saying that some wintry weather was needed to get shoppers buying boots. But spokesman Hugh Clark pointed out that shoes and clothes prices were still lower than a year earlier.

"It's a rough, tough, competitive market," he said.

The total volume of sales at textiles, clothing and footwear stores was nevertheless up 1.3 per cent in the three months to September and 6.9 per cent over 12 months.

This pace of growth was second only to sales of household goods. These increased 1.3 per cent during the latest quarter and 7.3 per cent over the year. Next strongest were sales at department stores, followed by mail order.

The volume of food sales remained weak, up 0.4 per cent during the quarter and 0.9 per cent on the year.

Analysts said the figures were on the weak side, so the City saw them as easing the pressure on Kenneth Clarke, Chancellor of the Exchequer, to raise interest rates after next Wednesday's monetary meeting. The pound fell nearly two pfennigs against the German mark, closing at 2.4323 as a result.

David Walton, an economist at Goldman Sachs, said: "The Chancellor is unlikely to see any reason to tighten monetary policy." But, like many analysts, he said the cost of borrowing would have to rise sooner or later because the pace of demand in the economy was picking up strongly.

Ciarn Barr at Deutsche Morgan Grenfell agreed. "This month's weakness in retail sales is probably a healthy pause in a firm upward trend," he said, predicting that an increase in base rates would be necessary ahead of the election.

The weekly sales figures from the John Lewis department store group hinted that shopping volumes might have already recovered this month. Other anecdotal evidence points to renewed bustle. Barry Turnbull, Newcastle's city centre manager, said: "Traders are describing business as very good, very strong."

However, as long as the first estimate of gross domestic product in the July-September quarter, due tomorrow, shows only a modest rise, Mr Clarke will be able to postpone the day of reckoning.

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