U.K. Retail Sales Annual Growth Accelerates In August

Sep 20, 2007 - UK retail sales posted a seasonally adjusted 4.9% growth in annual terms in August, the Office for National Statistics, ONS said, Thursday. Retail sales grew 4.4% last month. Analysts were looking for a 4% annual increase in August.

Compared to July, retail sales gained 0.6% in August, pushed by growth in food stores, clothing stores and other non-food stores. Monthly growth rates were volatile, the ONS cautioned. Retail sales grew a sequential seasonally adjusted 1.3% in constant prices in the three months to August. Retail sales in the three months to July advanced 1.2%. Sales in the same prior period of the last year were a little higher at 1.5%.

In the three months to August, sales volumes in non-food stores grew 2.2% sequentially, while sales volumes in food stores slipped 0.1%. Sales in household goods stores jumped 5.3%, the biggest increase since April 2001, the ONS said. Sales in non-specialized stores, including department stores gained 5.1%, the highest three-monthly growth for this sector since records began to be maintained in 1986, the ONS noted. The previous high was the 5.0% growth in the three months to July.

On an annual basis, the seasonally adjusted volume of retail sales gained 4.3% in the June to August period, compared to 4.1% in the three months to July. Sales in food stores edged up 0.1%, recovering from a 0.1% fall in sales in the previous period. Sales in non-food stores climbed 6.5% in the three months to August, after rising 6% in the three months to July. This was the highest growth since the three months to November 2004, when retail sales grew 7%, the ONS said.

Consumer price inflation was likely to remain in the 2% target region, the Monetary Policy Committee of the Bank of England, BoE, said at its September meeting. Employment growth continued to be strong and manufacturing had posted solid gains in output. The present turmoil in financial markets would also be contained, the Committee had opined.

Yet, analysts felt that retail sales were riding a high before a fall. They pointed out that the high summer sales were achieved by aggressive price discounting. Further, economic conditions were now tighter as acknowledged by the BoE in its latest meeting. However, given the low 1.8% inflation in August, there was a possibility of a rate cut in the coming months by the BoE, which would boost sales, experts said.