UK Retail Sales Oct 2012

The amount of UK retail sales increased by 2.5% in the 12 months from September 2011 to September 2012.

This measure includes the amount (quantity) of goods in all retailing, seasonally adjusted. The amount spent (value of goods) increased by 3.2%

Annual store price inflation was estimated to be 0.7 %.

retail sales

This suggests that the UK retail sector is relatively strong compared to other components of the economy. These figures gives hope for better GDP statistics in future quarters. Combined with falling unemployment, it suggests that the double dip recession may soon come to an end.

However, it also shows the continued price squeeze in retail shops. Shops have been able to boost sales through keeping prices and profit margins low. Retail sales may also have been helped by low interest rates, which have eased the burden for consumers with mortgages.

The headline CPI inflation of 2.2% is being driven by other factors, such as transport and energy prices.

Despite the increased retail sales volume, many big retail shops are still struggling with a report by  PricewaterhouseCoopers and the Local Data Company suggesting that, since the demise of JJB Sports, 32 shops per day are closing per day.

Household Goods

retail-household-sales

UK household goods retail sales are more volatile.

Many household goods, (white goods such as fridges and freezers, electronic goods e.t.c. are considered income elastic. A small fall in income causes a bigger % fall in demand. Therefore, in a period of falling incomes, people will delay buying.

In a recession, people can cut back on non-essential items, such as a new cooker. However, when the economy recovers, people who delayed buying take the opportunity to buy. Therefore, these non-essential ‘luxury’ goods, tend to be more volatile. If the economy recovers, you would expect to see a big increase in demand for these household goods.

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1 thought on “UK Retail Sales Oct 2012”

  1. I like the term “income elastic”, which makes sense. Electronic products such as fridges have such a long life that when income falls, people put up with them for much longer rather than replacing them sooner than they actually would have done otherwise.

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