British retail sales “disappointingly flat”

Retail sales saw a slight boost last month, rising 2.1% compared with August 2008, the Office for National Statistics has reported.

Sales from food stores increased 3.3% from last year, the highest rise since January 2005.

Sales from non-food stores were much lower, at 0.2%. Sales of textiles, clothing and footwear increased by 4.2%, while sales of household goods dropped by 3.9%, driven by a decrease in electrical stores.

Total sales over the three months to August were 2.7% higher than the same period last year, with the largest increase for food stores, up 2.9%. Non-food stores saw a lesser 1.7% rise.

Howard Archer, the chief European and UK economist at HIS Global Insight, says month-on-month retail sales were “disappointingly flat”.

He says in a statement: “The softness in retail sales in August reinforces suspicion that consumers still need significant encouragement to put their hands in their pockets and spend, such as particularly attractive offers or good weather.

“Significantly, the retail sales deflator fell at a reduced rate of 0.4% year-on-year in August compared to 0.7% in July, suggesting that there were fewer bargains to be had.”

The government’s plans to hike value added tax (VAT) back up to 17.5% from 15% in January may lift sales at the end of this year, as consumers try to spend ahead of the rise, Archer adds.

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