Belfast Telegraph

Sales boosted by rush for vacuums to beat EU ban

By Roger Baird

Shoppers rushing to pick up high-strength vacuum cleaners before an EU ban helped lift retail sales last month.

Store sales rose 3.9% in August compared to a year ago, and edged up 0.4% on July, according to the Office for National Statistics (ONS).

The increase is the 17th month in a row of consecutive year-on-year growth, and is allied with 18 months of quarterly rises.

The ONS said "it would be true to say that the underlying picture is one of growth".

The star performers last month were household goods which lifted 12.7% year-on-year as within this category furniture sales jumped 23.4%, its largest growth since records began in 1988.

Electrical appliance stores also saw a spurt in sales, driven by an EU ruling which banned sales of vacuum cleaners with motors above 1,600 watts from September 1.

But sales pressure on retailers continued as prices in August fell by 1.2% over the year, the largest fall since July 2009.

The main contributor to the fall came from petrol stations with prices down 5% over the year.

The ongoing supermarket price wars also pushed food prices down 0.1%, the first fall in annual prices since December 2004 when it also fell 0.1%.

The UK's economic recovery has been built on consumer spending and rising house prices.

But some economists are concerned about the stability of this growth as average wages trail inflation and housing transactions begin to ease.

IHS Global Insight chief UK economist Howard Archer said: "While the solid gain in retail sales in August indicate that there is still appreciable life in consumers, they do appear to have flagged somewhat overall after spending at a strong rate overall through the first half of the year."

Mr Archer added: "However, it is questionable how strong consumer spending can be on a sustained basis until current very low earnings growth picks up appreciably."

Markit chief economist Chris Williamson said: "UK retailers reported a renewed upturn in sales in August, but the trend has weakened and suggests that the Bank of England has correctly anticipated a slowing of the economy in the second half of this year.

"As such, the data play into the hands of those policy makers arguing that any hike in interest rates should be delayed until next year."

Belfast Telegraph