Sat, Sep 18, 2021 page10

• UK retail sees worst stretch since 1996

  • Bloomberg
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  UK retail sales last month fell unexpectedly for a fourth month, the longest stretch of declines in at least 25 years, raising concerns about the economic recovery as a resurgence of COVID-19 cases and supply shortages take a toll.

  The volume of goods sold in stores and online fell 0.9 percent after a 2.8 percent plunge in July, the Office for National Statistics said yesterday.

  Food sales dropped sharply, as consumers steered spending toward bars, restaurants and entertainment venues that reopened after lockdowns, it said.

  Doubts are growing about the outlook for consumer spending, which powers the British economy. COVID-19 cases are rising and millions of households now face a sharp squeeze on living standards after a surge in inflation.

  Meanwhile, Brexit and the pandemic have dried up the pool of workers retailers rely on and created supply-chain disruptions.

  The fall in sales last month surprised economists, who were predicting a small increase, and sales excluding auto fuel declined 1.2 percent. It was the first run of four consecutive declines since comparable records began in 1996.

  A separate survey showed that 6.5 percent of retail businesses were unable to get the goods, materials and services they needed from Aug. 9 to Aug. 22. The figure was highest at department stores at 18.2 percent, followed by clothing stores at 11.2 percent.

  “Recovery has been bumpy across the sector with many retailers dealing with supply-chain disruption and labor shortages,” said Emma-Lou Montgomery, associate director at the fund manager Fidelity International.

  “Rising prices across the board will also be starting to pile pressure on households and could continue to hamper buying habits down the line,” she said.

  The only categories that enjoyed an increase in sales were clothing and fuel, as more people returned to offices and traveled for summer holidays.

  The figures “should cause markets to doubt” whether the Bank of England would hike interest rates as soon as February, Pantheon Macroeconomics chief UK economist Samuel Tombs said. “The near-term outlook for households’ spending is overcast.”

  Consumer prices rose 3.2 percent in the year to last month, the fastest pace in more than nine years.

  A further acceleration is almost inevitable, with natural gas and electricity bills set to increase sharply in the autumn and supply-chain disruptions leading to shortages of everyday goods.

  The government is also paring back support for low-waged workers by phasing out a temporary increase in universal credit benefits. It is also eliminating a tax break on property purchases and planning to boost payroll taxes in April to pay for improved health care.

  Meanwhile, an autumn spike in unemployment looms with the ending of furlough payments for those out of work during the pandemic.

  High frequency indicators point to a loss of consumer momentum this month, with visits to shops, spending on cards and eating out at restaurants all easing.

  “The numbers will stoke further fears that the pace of the UK economic recovery is slowing and that the revival in consumer demand has already peaked,” Equiti Capital head macroeconomist Stuart Cole said.
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