Retail sales in Britain at record low |
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Thu, 30 Jun 2005 09:05
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LONDON: Britain is experiencing the worst-ever fall in retail sales. The Confederation of British Industry, which announced the details of its monthly distributive trades survey, covering 125 retailers during May 31-June 15, said 42 per cent of the retailers queried had their sales volumes down, while 23 per cent said the volumes have gone up. The difference of minus 19 is the sharpest since the CBI started recording the rates in July 1983.
The CBI, however, cautioned the comparison with June 2004 could not be a fair picture as that was the period of Euro 2004 football tourney, a month recorded for hiked spending.
Meanwhile, Bank of England has come out with some encouraging data showing consumer credit and mortgage lending had risen more than expected in May. This would mean the prospects for the housing sector revival are not bad.
The Bank disclosed that net consumer credit rose 1.8 billion pounds in May, more than the projected 1.6 billion pounds and definitely higher than the April figure of 1.3 billion dollars. Mortgage lending went up to nearly 8 billion pounds, more than the 7.4 billion pounds projected and the April figure of 7.3 billion pounds.
John Longworth, an executive director at Asda and who headed the CBI survey panel, said last year's interest rate rises were slow to take effect but consumers have clearly tightened their belts quite significantly since the beginning of this year.
Said Longworth: "A year ago retailers were reaping the benefit of Euro 2004, which was credited with boosting sales of everything from football clothing to TVs and beer. But while this may explain part of the record year-on-year decline now registered, there is no doubt that the underlying picture is also bad."
The worst affected in the market is furniture and hardware segment, basically because of the gloomy housing market.
The survey indicated that there is not much difference for July.
While some analysts wonder whether such a scenario would indeed call for a cut in interest rates even if it is in August, there are many who feel the chances of an early decision are bright, especially in the wake of the survey findings.
The CBI's three-month moving average of sales also showed a fall, to a balance of minus 13. This is also the worst since 1983.
Meanwhile, the pound reached an 8-month low against the dollar, but interest rate futures gave a rally based on predictions of an interest rate cut from the 4.75 per cent possibly in August.
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