High street future 'clouded by uncertainty'

05-09-2006

Uncertainty about the future of Britain's retail sector has deepened further as the long-term impact of last month's interest rate rise remains unclear, the British Retail Consortium (BRC) has claimed.

Publishing its retail sales monitor in association with accountancy firm KPMG, which revealed a slowing of overall sales growth in August, the BRC argues that a multitude of factors are affecting demand in unstable and unpredictable ways.

The weather appears to have played a part in influencing August's figures, which saw improvements in furniture and other home products as shoppers were driven indoors.

Then comes the Bank of England's decision to raise interest rates to 4.75 per cent, which could have played a part in dampening consumer spending confidence generally.

Finally, the persistent trend of price discounting among retailers desperate to stimulate activity also demonstrates uncertainty. Although the end of this summer's sales prompted a decline in the clothes sector in August, in many sectors dampened prices continued undeterred.

As a result of these factors Kevin Hawkins, director general of the BRC, has described the outlook for the rest of 2006 as "very uncertain".

"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," he said.

"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."

In total the BRC/KPMG sales monitor registered a 2.5 per cent year-on-year increase, and a 2.7 per cent increase in the three month period to August this year.

Pessimism from the BRC does not reflect trends detected by the Confederation of British Industry (CBI), which found that sales in August had hit a 20-month high.


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