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Food sales slide but overall retail trade up

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Rising prices contributed to a dramatic fall in the volume of food sales in June but a significant rise in non-store retailing meant the overall retail industry fared relatively well during the month, according to the latest data.

Office for National Statistics (ONS) figures published today show that the volume of sales at stores predominantly selling food dropped 4.2 per cent year-on-year, coinciding with estimated price rise of 5.8 per cent above the CPI level of 4.2 per cent.

Conversely volume sales of non-store retailing recorded the largest growth since the series began in 1988, rising by 24.4 per cent compared to June 2010. Internet sales alone represented 9.9 per cent of all retail sales during the month.

The overall value of retail sales excluding automotive fuel was up 2.4 per cent on a year earlier, while volumes increased by 0.2 per cent.

Vicky Redwood, Senior UK Economist at Capital Economics, said that today’s figures provide the latest evidence that spending bounced back in June but warned there are a number of factors set to have an impact on sales later in the year.

Citing figures that include sales of automotive fuel, she said: “Overall sales volumes posted a 0.7 per cent monthly rise (broadly as expected), driven by a 1.1 per cent rise in non-food sales.

“However, sales have been bouncing about a bit recently and the underlying trend still looks broadly flat. Indeed, the annual growth rate was just 0.4 per cent and sales in Q2 as a whole rose by just 0.2 per cent, only slightly more than Q1’s 0.1 per cent rise, suggesting that retail hasn’t contributed much to GDP growth in Q2.”

She also predicted that sales volumes will soon fall again due to the expected increased squeeze on real pay.

Breaking down the ONS figures by sector shows that household goods stores struggled during June, with sales down 3.7 per cent by volume and 3.3 per cent by value year-on-year.

Non-specialised retailers including department stores, and other general stores were the largest drivers of growth during the month, while fashion sales were steady.

Although overall sales improved in June, insolvency experts expect more problems with retailers in the months ahead following the recent closure of a number of high street businesses earlier this year.

Brian Johnson, insolvency practitioner at HW Fisher & Company chartered accountants, said: “For many traditional retailers, as the latest statistics reveal, the growth of online shopping is only adding to the headwinds they face.

“At best, the majority of retail outlets are limping along and it is only a matter of time before more fall by the wayside.”

Published on Thursday 21 July by Editorial Assistant

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