Retail witnessed the largest monthly rise this year in October according to the Office of National Statistics, but businesses in the sector have been warned against complacency.
The total volume of retail sales was up 3.9% on 2005 for the same period. Last month’s increase 0f 0.9% was the largest monthly increase since November 2005.
General stores and non-store retailers, such as online companies, were the biggest beneficiaries, where sales in both sectors increased by 2.5%. Clothing stores’ sales grew 1.9%, the highest since February 2006.
But despite the growth in volume sales, the British Retail Consortium (BRC) has warned that increased volume does not necessarily mean increased retail growth.
“The ONS figures are based on volume of sales rather than value,” Malcolm Pinkerton, business information analyst at the BRC, told Crimson Business.
“Of course it’s encouraging to see growth, but we must compare it to last year’s figures which were dismal, due to things like 7/7.”
Pinkerton said the fact that volume sales have increased was more to do with retailers offering discounts and promotions rather than an increase in profits.
The BRC said there was only a 2.4% like-for-like October increase in value compared to October 2005. Pinkerton said the value increase was a better reflection of retail growth than volume figures.
Pinkerton also expressed concern over the recent interest rate rise.
“It will have a big psychological impact on consumers, who will probably ring fence Christmas shopping and cut down on spending afterwards,” continued Pinkerton.
Pinkerton said the full effects of the interest rate rise on retail growth will not be revealed until the new year.
© Crimson Business Ltd. 2006
