Retail sales in Great Britain unexpectedly contracted for the fourth consecutive month in August, raising concerns among some economists over the pace of the post-pandemic recovery.
The volume of monthly retail sales fell 0.9 per cent between July and August, according to data from the Office for National Statistics. This followed a sharp contraction in July and missed the 0.5 per cent expansion forecast by economists polled by Reuters.
Sales marginally dropped in June, according to downward revised figures, and had contracted in May, marking the longest period of falling sales since comparable data were first available in 1996.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said August’s retail sales, the first official economic data for that month, “bring more evidence that the recovery in consumers’ spending has lost considerable momentum in the third quarter”. He added that the figures should cause markets to doubt whether the Bank of England’s Monetary Policy Committee “really will be in a position to hike bank rate as soon as February”.
But Jonathan Athow, ONS deputy national statistician for economic statistics, said the data suggested that “the drop in food stores’ sales is linked to an increase in eating out following the lifting of coronavirus restrictions”.
Martin Beck, senior economic adviser to the EY Item Club, also thought that the fall in sales “is likely to reflect the continued normalisation of spending patterns”.
However, supply chain disruption was an issue for retailers with about 7 per cent reporting not being able to secure the materials, goods or services they needed in August, according to the ONS. The proportion rose to 18 per cent for department stores and 11 per cent for clothing stores.
Lynda Petherick, head of retail at Accenture UKI, said that “the continued impact of labour shortages and supply chain disruption weighed heavy on the [retail] sector, in a month that was characterised by images of bare shop shelves and delayed deliveries”.
Goods and labour shortages are expected to continue over the Christmas season.
“A perfect storm of labour shortages, supply chain issues and increased demand will continue to test retail leaders as we enter the golden quarter,” said Oliver Vernon-Harcourt, head of retail at the consultancy Deloitte, referring to the three months that include Black Friday and Christmas.
Food store sales volumes fell 1.2 per cent in August, with some evidence of consumers increasing social spending, such as eating and drinking at restaurants and bars, instead.
Non-food stores also reported a fall of 1 per cent, driven by a contraction at department stores, which have recorded five consecutive months of falls, and other stores, such as sports equipment and computer outlets.
In contrast, automotive fuel sales volumes rose 1.5 per cent as people travelled more.
Compared with February 2020, before the first coronavirus restrictions, sales were still up 4.6 per cent.
The proportion of retail sales made online rose over the previous month to 28 per cent in August and was still well above the 19.7 per cent in February 2020, a sign of a “structural change”, said Paul Donovan, chief economist at UBS Global Wealth Management.
“It took time to persuade my mother to shop online, but now she has discovered online price discounts, there is no turning back,” he said.
Source: Economy - ft.com
