Retail revival adds to optimism on UK economic recovery as High Street sales pick up

| October 30, 2012 | 0 Comments

11:37 EST, 30 October 2012


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11:47 EST, 30 October 2012

More evidence that UK economy has turned a corner emerged today with figures showing that activity on the High Street is picking up.

A CBI survey revealed 47 per cent of retailers saw sales in the first half of October rise compared to a year earlier, while 17 per cent said sales were down.

The resulting ‘balance’ of 30 is the best since June, when sales were lifted by the extra bank holiday for the Queen’s Diamond Jubilee, and offers a much-needed boost for retailers in the run-up to Christmas.

High Street sales took a turn for the better in October

High Street sales took a turn for the better in October

The British High Street received some rare good news last week with an announcement from Debenhams that it will open a further 17 UK stores over the next five years, after bucked the gloom with a set of strong year-end results.

However, Argos had less encouraging news as its new strategy to move online, unveiled last week, will involve the closure or relocation of least 75 stores.

And official figures earlier this month showed retail sales were 1 per cent higher between July and September than in the previous three months – the biggest increase for two years.

The retail pick-up adds to hopes that Britain’s economy will remain in growth in the fourth quarter after emerging from its double dip recession with stronger-than-expected growth of 1 per cent in the third quarter.

Hopes: There was a sharp rebound in retail sales between July and September

Hopes: There was a sharp rebound in retail sales between July and September

The strong gross domestic product data was welcomed in all quarters but many economists believe the economy will grind to a halt again in the next two quarters.

The CBI said consumer confidence has been helped by falling inflation after the consumer prices index fell to 2.2 per cent last month, marking its lowest level for nearly three years.

Anna Leach, head of economic analysis at the CBI, said: ‘Falling inflation has somewhat eased pressures on family budgets, so that households are a little more willing to spend.’

But economists added a note of caution as consumers are expected to come under pressure from rising energy bills and amid concern over the global economy.

Ms Leach said: ‘There’s still a risk that ongoing uncertainty over the global economic outlook could dent consumer confidence, hitting prospects for the retail sector, while the scope for inflation to fall further is limited.’

Howard Archer, chief economist at IHS Global Insight, said: ‘It remains to be seen if consumers will sustain their recent improved spending, given that they still face significant headwinds and consumer price inflation could well move back up in the near term.’

Today’s CBI figures showed that clothes sales grew for the first time since July, with shoppers stocking up on winter warmers.

Furniture and carpet sales also performed well, while grocers saw sales rise for the sixth month in a row.

Shop owners also believe the rebound will continue next month, with a balance of 27 per cent expecting sales to be higher in November.

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