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UK Retail Sales Slide in August as Inflation Rises

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UK spending is declining at the quickest rate in about four decades. (Image: Micah Burke)
UK spending is declining at the quickest rate in about four decades. (Image: Micah Burke)

ECONOMY

  • UK retail sales slump in August with consumer confidence low and inflation high
  • Report shows like-to-like sales down 0.6% compared to August 2010
  • Shop closures expected to continue in lead up to Christmas

Retail sales figures in the United Kingdom declined in the month of August with consumers keeping a keen eye on their finances and jobs, according to a report by the British Retail Consortium.

Consumer confidence dropped for the third straight month while inflation continued to rise, driving spending down at the quickest rate in about four decades, reported Bloomberg. Retail figures were 0.6% lower than August 2010 in a like-to-like comparison of sales, which discounts sales from newly opened stores.

Overall, sales were up 1.5%, compared to a 2.8% rise in August last year.

Among the hardest hit was the footwear segment, which posted its biggest annual decline since May 2009. Furniture and accessories also suffered a large drop.

Figures released by the BRC also showed a significant slide in the services sector, whose monthly sales sunk to a ten-year low. The consortium said that the riots in England had not had a significant effect on the UK high street, as they were too localized and sporadic.

Forecast Will Improve

The month of August began with sunny forecasts both in weather reports and retail activity, though neither was to last very long. Despite a good start sales quickly slipped and drove overall figures downward.

The only sector to see a rise was food and drink, with like-for-like food sales rising 1.4% from last year.

In the BRC report, director general Stephen Robertson said a rise in VAT throughout the UK played a part in the poor figures, but that the forecast should improve. "The retail sector's performance for August has been essentially flat, particularly bearing in mind the increase in VAT, which will be responsible for some of the growth in spending. It remains a tale of two halves. The food sector has proved more resilient, but non-food retail showed a marked decrease in sales year-on-year,” said Robertson.

"Poor consumer confidence, high inflation and the ongoing squeeze on personal finances remain the biggest threats to the retail sector," he added.

Following on from poor sales in spring, the new figures are stirring fears that the UK is about to slip back into recession. This latest 0.6% slump could be devastating for many smaller retailers, with shop closures expected to continue in the lead up to Christmas.

Key Statistics –  Retail Sales in the UK (source: British Retail Consortium)

  • Like-to-like retail sales in the UK were down 0.6% from August last year, in which period sales saw a 1.0% rise.
  • Total sales, including new retail outlets were up 1.5%, in comparison to a 2.8% increase in August last year.
  • Excluding food, out of store sales, or sales made by phone, internet or mail, showed the strongest growth in four months with a 12.6% rise compared to last year.

By James Mulholland for
James Mulholland is a Paris-based internet and broadcast journalist specializing in sports, current affairs and technology news, while also freelancing as a photographer.

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