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Saving For a Space Ship

Heavy Discounting Buoys Uk Retail Sales

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CML twot Coogan quoted at end of article.

Anecdotally, I can't see it myself here in Chester. It looks a bit desperate, with shops closing or turning into 'we're having a bankrupt sale' temporary shops. Also Amazon & ebay sellers still moaning of v. slow sales on the forums, often blaming technical faults.

A second month of heavy discounting tempted shoppers to keep spending in August and underpinned stronger growth than expected in retail sales, official data showed on Thursday.

The volume of total sales rose by 0.6 per cent between July and August, giving an annual increase of 4.9 per cent, the Office for National Statistics said. Economists had forecast a monthly rise of 0.1 per cent and an annual rise of 4 per cent.

A rebound of 1.3 per cent in food sales, which had tailed off in recent months, drove the increase but volumes grew steadily across all sectors apart from household goods.

However, a fall of 1 per cent in prices since the previous August suggests consumers are becoming more tentative as they begin to feel the effects of five interest rate rises in the last year. The data follow warnings of tougher trading conditions earlier this month from retailers including Next and French Connection.

“With volumes continuing to be underpinned by aggressive discounting these data present a far less upbeat snapshot of the consumer’s health than suggested by this report’s headline,” said Richard McGuire, strategist at RBC Capital Markets.

The Bank of England’s monetary policy committee concluded at its September meeting that the risks of inflation overshooting its target in the coming months had probably receded, although it noted indicators of consumer sentiment remained mixed.

“This discounting means that the inflationary implications of this surprisingly strong retail sales number are not so onerous,” said Daragh Maher, strategist at Calyon Crédit Agricole.

Separate data releases on mortgage lending added to evidence that the housing market, while slowing, remained robust in August.

The British Bankers’ Association said net mortgage lending had risen £6.1bn in August, while the Council of Mortgage Lenders said gross mortgage lending fell 6 per cent from £34.1bn to £32.2bn, a 3 per cent decrease on the same month the previous year, but still a relatively high level.

Michael Coogan, CML director general, said there was “no obvious decline in consumer demand, although some decrease in the supply of lending is being experienced in the short term as a result of the problems lenders face in raising wholesale funding.”

Edited by Saving For a Space Ship

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