UK Retail Sales Up

By Stewart Douglas

UK retail sales have enjoyed growth over the course of August beyond analyst expectations as a result of widespread sales on the high street which has led to significantly decreased prices.

The sales figures released today by the Office for National Statistics show an increase in retail sales beyond the initial projections for the period, reflective of growing consumer spending on the high street in fashion and footwear sectors.

Retail sales in the month of August grew by a substantial 0.6% over the course of August, taking the annual rate of growth to 4.9% to that month - the highest rate of growth since March of this year as a result of lower prices across retail sectors.

However the increase in discount offerings from retail brands on the high street has been taken by many analysts as a signal that the consumer environment may be tightening amidst growing concerns of a credit crunch and higher interest rates in recent months.

Additionally a drop in sales of household goods by around 2.5% over the period has also been taken to be indicative of a wider slowdown in housing, and the increased pressure on consumer spending power.

Whilst rising consumer sales would normally be taken as an indicator of inflation, the fact that these are as a result of lower prices on the high street will help alleviate any worries the Bank of England may have had that this would reflect an increase in inflation.

Analysts are heavily predicting that consumer spending in the UK is likely to nosedive over the coming months as the impact of high interest rates and a less favourable credit climate begin to make themselves known on the wider   As such, the news today did little to inspire confidence on the FTSE, which closed down overall nonetheless.