According to the BRC/KPMG retail sales monitor for August 2006, UK retail sales were up 2.5 per cent on a like-for-like basis, compared with a weak August 2005, when sales dropped 1 per cent in the wake of the July bombings in London.
The three-month trend rate of growth fell to 2.7 per cent from 4.1 per cent in July for like-for-like sales, and to 5.4 per cent from 5.6 per cent for total sales, reflecting the continued growth of retail space.
Food sales slowed after July's sun-related strength, and clothing slowed as clearance sales ended. But August's cooler weather encouraged shoppers back to the shops for 'indoor' homewares and furniture, especially where new lines or promotions were on offer.
With consumers more pessimistic, after the interest rate rise, about economic prospects and plans for major purchases, sales of larger items were still often discount-driven.
BRC director general Kevin Hawkins said: "While the modest recovery in some non-food product categories is obviously welcome, the comparatives with August 2005 are very weak and price competition is as keen as ever. Any suggestion that we are seeing a significant and sustainable return to the sort of sales growth we were reporting two or three years ago is simply not supported by the evidence. The recent increase in interest rates has yet to work through to consumer spending or the housing market. The outlook for the next few months is therefore very uncertain."
And Helen Dickinson, KPMG's head of retail, added: "For the first time this year, the results for the month were not primarily driven by sales of food and drink. The cooler and wetter weather took us back to the shops seeking a wider assortment of purchases with both clothing and home-related sectors doing better.
However, the consistent theme of heavy discounting to drive sales remains and hence, its resultant impact on profitability continues unabated. The strength of the 2005 comparatives continues to increase as we enter the most critical trading period of the year, thereby raising doubts about whether the growth rates we are currently seeing are sustainable."
BRC/KPMG Retail sales moniter UK - August
Year-on-year like-for-like (August 2006 v August 2005) UP +2.5 per cent
Year-on-year total sales (August 2006 v August 2005) UP +5.5 per cent
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