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UK retail sales stagnated in August reflecting the cautious approach of consumers amid rising unemployment.
Retail sales remained flat in August, following a revised 0.2% growth registered in July, a report from the Office for National Statistics revealed Thursday. The agency revised the monthly growth for July from the initially reported 0.4%. August's flat reading was in contrast to economists' expectations for a 0.1% increase.
On a year-on-year basis, retail sales climbed 2.1% in August, slower than the consensus forecast of 2.7%. Sales were up 2.9% in July, downwardly revised from the initial estimate of 3.3%.
In August, food stores sales increased 3.3% annually. The ONS said this was the highest, along with July 2006, since January 2005. While non-food stores sales grew 0.2%, sales in non-store retailing and repair increased 12.4%. Textiles, clothing and footwear stores sales were up 4.2%.
Meanwhile, the value of retail sales in August was 1.6% higher than in the same month a year earlier.
In the three months to August, total sales volume increased 2.7% from the same period last year and was 1.2% larger than in the previous three months.
Last week, the British Retail Consortium had reported a 0.1% annual decline in retail sales value on a like-for-like basis in August. At the same time, total retail sales increased 2.2%.
Today, the retail body's Director General Stephen Robertson said the official data confirmed the findings of BRC that strong retail sales reported in June and July were not sustained. With a 14-year high jobless rate and expectations of higher rate into next year, consumers became very cautious about spending on expensive goods, he added.
On Tuesday, official data revealed that the British unemployment level stood at 2.47 million in the three months to July, the highest since May 1995. The unemployment rate rose to a near 13-year high of 7.9%.
Elsewhere on Wednesday, a survey conducted by the Confederation of British Industry found that manufacturers' order books remains depressed with the weakness in foreign as well as domestic demand for UK made goods.
The monthly Industrial Trends Survey found that firms expect little change in production in the coming quarter, with 27% expecting volumes of output to fall in the coming three months, while 25% predict an increase. Separately, the Bank of England/GfK NOP inflation attitudes survey showed that inflation expectations were steady in August. The BoE said median expectations of the rate of inflation over the coming year were 2.4%, the same as in May.
The 1.6% annual inflation rate recorded in August was the lowest since January 2005. The annual rate stayed below the central bank's 2% target for the third straight month.
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