ONS figures show a surge in sales |
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Fri, 22 Jul 2005 08:05
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The Office for National Statistics (ONS) figures for the month of June show that there was an unexpected surge in retail sales, which rose by 1.3 percent for the month. This figure happens to be the highest that the sales have scaled since December 2003.
The agency also reported that shopper were spending more in nearly all high-street shops. These findings are surprising, as all retailers have blamed weakening consumer response for the ills that plague the market at the moment.
Retailers have said that the sales growth was driven by the fact that they brought summer sales forward by almost a month. An additional factor for the rise in the sales happened to be the scorching heat, which drove people to equip themselves with the latest summer fashions and sportswear, thus spurring sales in those segments.
When viewed on the basis of a three-month ratio, sales picked up by 0.7 percent, the highest since November 2004. Clothing and food stores saw the highest growth in sales for the three-month period with sales rising by 3.5 percent and 2.5 percent respectively. In fact all sectors reported a rise in sales except the housing goods, which continues to be gloomy due to the corresponding bleak picture in the housing market.
Dominic Walley, economist at the Centre for Economics and Business Research confirmed this when he said, "The housing market remains flat, wage inflation fell in May to 4.1%, the lowest since October 2004, and claimant count unemployment is rising slowly. An unexpected spring in the step of retail will no doubt make the MPC more cautious about cutting rates at its next meeting."
However, at Wednesday's meeting of the MPC it emerged that the vote was 5 to 4 in favor of the rate cuts.
But these figures should ensure that the cut would be only a quarter point, "A 0.25 basis point interest rate cut remains highly likely in August. It may be, though, that the next rate cut after that is delayed while the Bank of England continues to watch the consumer sector closely," said Howard Archer, chief UK economist at Global Insight.
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