Wednesday, May 24, 2017

Retail sales remain flat in September as price rises loom

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New figures released today by the ONS indicate that retail sales in September remained flat.

The retail sales statistics released today show that although retail sales are up roughly 4.1 per cent year-on-year, sales growth had all but halted compared with August.

Although there was growth in department stores household goods and non-store retailers, this was offset by a decline in sales in food stores, clothing and footwear stores and textiles shops.

 

Percentage of sales per sector by September 2016

The results fall under the predictions of City analysts who estimated a 0.4 per cent growth in sales for September.

Despite falling short of predictions, the amount spent in value during the month was up 2.9 per cent year-on-year and 0.1 per cent from August. 

Online spending showed the most significant change with an increase of 22 per cent from last year and 2.8 per cent from August.

READ MORE: Inflation rises 1% as consumers start to feel the effects of the weak pound

Fashion and footwear fared the worst, as the unusually hot month deterred shoppers from seasonal ranges.

Amid the recent public spats over shop prices, the average store price dropped by just 1.1 per cent, the smallest decrease since August 2014.

Many economists believe that slowdown despite slow steady growth, we will soon see sharp rises in prices as businesses begin to pass on the costs of the weak pound.

RELATED: Retail prices set to rise 5% “across the board” in 2017

“We very much doubt that this strength will last in the face of softer employment and wage growth and higher inflation,” Capital Economics’ Ruth Gregory said.

ING’S James Knightley added: “With inflation starting to respond to higher import costs relating to sterling’s weakness we are going to see household spending power being eroded.

“We also suspect that employment growth will slow markedly, meaning that consumer spending is likely to soften quite substantially next year.”

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