Retail sales volumes picked up in July, despite forecasts suggesting that consumer spending had already peaked.
Over half of retailers reported sales were up compared to last year, with the growth rate being the fastest reported since May 2000, according to the CBI’s latest distributive trades survey.
Economic analysts Consumer Futures, however, predict a slight downturn in spending, with growth falling to 3.2% compared with 3.8% last quarter, although it notes that the latest quarter point interest-rate cut could have a positive bearing on this figure.
The CBI has commended the rate cut as “a prudent move, without taking risks with inflation”; it should help maintain the relatively high rate of growth.
Consumer Futures research director Dr Neil Blake says, “Consumers have been the salvation, not the villains of the UK economy this year. It would be a grave mistake for the government or the Bank of England to try to reduce consumer spending now, especially since it is probably about to slow anyway.”
The CBI says that wholesalers saw a recovery in sales volumes despite expectations of a significant decline, with 42% reporting sales were up, while 33% said they were down. The positive balance of 9% compares with 3% in June.