It looks like a case of recession postponed – again. Figures from the Office for National Statistics this morning show that retail sales volumes were up 0.4 per cent in August. These figures followed a shock fall of 1.2 per cent in July reported last month (and even this has been revised downwards to a fall of 1.1 per cent). Over the past three months – perhaps a better guide than month on month figures – sales volumes are up 0.3 per cent. Somehow, in spite of wages, which until last month had been falling in real terms, consumers are finding the means, and the will, to carry on spending.
Today’s figures are in many ways the mirror image of July’s. Food sales volumes were up 1.2 per cent, compared to a drop of 2.6 per cent in July. Non-food sales were up 0.6 per cent, compared with a fall of 1.2 per cent in July. Yet non-store retailing – i.e. online sales – fell 1.3 per cent in August, down from a 1.9 per cent rise in July.
Whenever they are presented with disappointing sales figures, businesses are apt to blame everything on the weather. That was certainly the case in July, when poor summer weather was blamed for keeping people off the high street (although isn’t shopping a relatively more attractive activity when it is cool and wet and you are less likely to be spending your time, say, on the beach?).
It does seem as if forecasts of recession have, once again, been greatly exaggerated
Then again, the weather wasn’t much better in August, so it does rather challenge this whole theory. More likely the ups and downs of retail sales is simply a quirk of collecting statistics over a short period. Some months have four weekends, others five – that alone has quite an impact on retail figures.
But with quarterly retail sales figures showing a small rise, it does seem as if forecasts of recession have, once again, been greatly exaggerated. A little less than a year ago the Bank of England was predicting that Britain would be in recession for most of 2023, going into 2024. The IMF and others forecast that Britain would be caught in a trap of its own, the only major industrialised economy to shrink this year – a distinction which now looks like it is going to Germany instead.
With the Bank of England holding interest rates yesterday, and many now believing that 5.25 per cent will be the highest they'll go (several months ago many believed they could reach 6 per cent), the immediate future ought to be brighter. Household incomes, too, are rising again in real terms – possibly marking an end to the cost of living crisis.
But as usual there is a fly in the ointment, which is rising oil prices. Indeed, consumers do seem to have responded to rising prices by buying less automotive fuel in August. Sales volumes were down 1.2 per cent in August. Once again, as for so many decades until US shale producers smashed its power, Opec will strongly influence our immediate future. Just how much more will it want to turn the screw?
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