Retail sales in UK hit 5-month high

Updated: 2011-10-21 08:06

(China Daily)

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LONDON - UK retail sales rose unexpectedly in September by the most in five months, led by spending on electrical goods such as laptop computers.

Sales including fuel climbed 0.6 percent from August, when they fell a revised 0.4 percent, the Office for National Statistics said on Thursday in London. That's the biggest gain since April. In the third quarter, sales fell 0.2 percent compared with the previous three months.

The Bank of England, which expanded its stimulus measures this month to aid the recovery, said on Wednesday that household spending has been "weak for some time" as tensions in global markets affect consumer confidence.

Pressure on households may continue after gas and electricity costs helped to push inflation to 5.2 percent in September, the highest in three years.

"Recently, retail sales have held up better than we thought they would," Philip Shaw, chief economist at Investec Securities in London, said before the release. "But it's unlikely that we're going to get anything like a sharp rebound in consumption because of the uncertainties and downside risks facing the economy."

Sales at household-goods stores jumped 3.2 percent in September from the previous month, partly led by back-to-school spending on items such as computers, and demand for new video games. Food sales were unchanged and clothing sales fell 0.7 percent as warm weather curbed sales of winter ranges.

Overall sales were up 0.6 percent in September from a year earlier. Excluding fuel, retail sales rose 0.7 percent on the month and 0.4 percent on the year.

UK consumer confidence rose for the first time in four months in September as Britons became more optimistic about the economic outlook and spending, GfK NOP Ltd said on Sept 30.

"The squeeze on households' real income and the fiscal consolidation were likely to continue to weigh on domestic spending," it said.


The number of unemployed Britons rose to 2.57 million in the three months through August, the most since 1994. Inflation accelerated to 5.2 percent in September, while data last week showed that annual growth in pay excluding bonuses slowed to 1.8 percent in the three months through August.

Debenhams PLC Chief Executive Officer Michael Sharp said in a statement on Thursday that it is "clearly right to remain cautious about the strength of consumer confidence over the next 12 months given the uncertain economic outlook". The UK's second-largest department store reported that annual profit before tax rose 4.4 percent to 157.7 million pounds.

The retail sales deflator, a measure of changes in shop prices, fell to 4.8 percent in September from 5.2 percent in August, the statistics office said. Excluding auto fuel, the deflator was 3.3 percent.

Bloomberg News

(China Daily 10/21/2011 page17)