New figures out this week show that retail sales have dropped for the first time since January. In what many believe to be the latest sign of an economic slowdown, statistics from the NOS show retail sales fell by 0.5 pc between July and August.
The figure is much lower than the 0.3 pc increase many economists had predicted and supports the belief that the summer marked a peak in activity. The data comes in sharp contrast to July’s results which saw an increase of 0.8 pc.
The ONS reported spending had dropped right across the board with food, clothing and footwear all experiencing a lack in demand. According to the data; non-food stores were hit the hardest in August – they experienced a 0.7 pc fall, while food stores saw a decline of 0.5 pc.
Howard Archer from IHS Global Insight described the fall as “a nasty shock” and said it dealt “a significant blow to growth hopes”.
The FTSE 100 and the pound dropped immediately after the data was published and the figures have led to a new-found concern for the British high street. Major retailers such as Next and John Lewis have already voiced their concerns about the future prospects of British spending.
The drop in retail sales backs up the theory that consumers are restricting their spending habits as a result of the imminent public spending cuts and fears the UK could be about to encounter a “double-dip” recession.