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August retail sales boosted by high-powered vacuum cleaners

UK retail sales rose by 0.4% during August, helped by shoppers looking to snap up high-powered vacuum cleaners ahead of an EU ban on the products.

The Office for National Statistics (ONS) also said sales were up 3.9% compared with the same month last year.

Demand for household goods - notably furniture and electrical goods - was behind the rise in sales, the ONS said.

It also said that prices in stores fell over the year, with food prices seeing their first decline since 2004.

Average store prices in August were down 1.2% from a year ago, the ONS said, the largest annual fall since July 2009.

The continuing price war between supermarkets meant that prices at food stores were down 0.1%, the first annual fall in this sector since December 2004.

'Solid gain'
Under EU energy-saving regulations that came into force at the end of August, companies in the EU have been banned from making or importing vacuum cleaners above 1600 watts.

The ONS said that reports from electrical goods stores suggested that sales of high-powered vacuum cleaners had risen in August ahead of the change.

But the biggest contribution to sales growth came from furniture stores. These saw sales rise by 23.4% over the year, the biggest growth since records began in 1988, with retailers reporting strong sales of flat-pack furniture.

Although the 0.4% rise in sales during the month of August was an improvement on the previous two months, Howard Archer, chief UK and European economist at IHS Global Insight, expects "significantly reduced growth" in sales during the third quarter of the year compared with the second.

"While the solid gain in retail sales in August indicates that there is still appreciable life in consumers, they do appear to have flagged somewhat overall after spending at a strong rate overall through the first half of the year," he said.

David Kern, chief economist at the British Chambers of Commerce, noted that deflation in the retail sector had "intensified" last month.

"This signals that inflationary pressures in the economy are easing, while wage growth remains stagnant," he said.

"It also reinforces our view that the [Bank of England's Monetary Policy Committee] should not consider higher interest rates until well into next year."

Source : BBC News

18 September 2014

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