UK retail sales jump 49% as spending spree continues
A surprise jump in high street sales fuelled hopes that consumers are willing to heed the Bank of England's message to spend not save.
The CBI's distributive trades survey for September showed unexpected strength as the balance of retailers reporting that sales were up year-on-year climbed to a six-year high at plus 49%, compared with plus 39% in August.
It was the third consecutive increase and followed a decent month for clothing and footwear sales in particular, the business lobby group said.
Retailers also expect sales to be strong next month, but economists warned consumers are likely to find life much harder going forward as the public spending squeeze and rising food prices weigh on sentiment.
They also noted that the official measure of retail sales showed a much weaker picture during August.
Separate figures yesterday revealed a fall in the UK's savings ratio as households dipped into reserves to finance a pick-up in spending between April and June.
This week the Bank of England said savers should be ready to "eat into" their funds to help them through the current period of low interest rates.
Charlie Bean added that the Bank is deliberately keeping rates low in the hope that British families will go out and spend money to inject vigour into the economy. "What we're trying to do by our policy is encourage more spending," he added.
The CBI said the bank holiday weekend and the tail-end of summer sales resulted in a bumper period for retailers.
Ian McCafferty, CBI chief economic advisor, said: "Retailers expect sales growth to continue next month and, as we get closer to January, sales will be helped by households seeking to beat the VAT rise. But weak prospects for take-home pay means consumer spending is likely to be restrained in 2011."