Retail sales: better than expected

23 Nov '06

2 min read

These figures indicate that consumer confidence remains resilient, despite August's interest rate rise and provides reassuring news for retailers as the crucial festive period approaches.

This 3.9 percent increase in retail sales is the seventh consecutive month during which growth has exceeded 3.0 percent.

In contrast to the media who lead with the volatile seasonally adjusted volumes figures for their headlines, Verdict traditionally focuses on the more reliable non-seasonally adjusted value sales.

However, it is interesting to note that volume sales improved by 0.9 percent, despite October being the second consecutive month in which retailers have increased prices - albeit at 0.1 percent this is considerably lower than September's 0.7 percent hike.

This indicates that consumers remain upbeat, no doubt buoyed by upward revisions to house price growth and sustained increases in mortgage approvals in recent weeks.

From a sector perspective, clothing retailers led the field increasing year-on-year value sales by 7.0 percent - their strongest growth for over two years, largely dispelling the notion that the unseasonably mild weather has affected sales of winter clothing.

Internet retailers also displayed solid growth at 5.4 percent, highlighting the pivotal role this channel is likely to play over Christmas.

Grocers continue to storm ahead as food stores posted a 4.4 percent increase, largely driven by strong non-food sales. Household goods stores posted growth of just 1.4 percent, despite a weak comparative, as both DIY and furniture retailers grapple with higher costs of raw materials.

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