UK retail sales surged to a three year high recently, as warmer weather and summer holidays provided a much needed boost of good news. The news courtesy of a survey by the Confederation of British Industry.
During the month of August, 18 per cent of retailers surveyed, reported that sales were off from a year ago, while 53 per cent of the retailers said they were higher. The survey also demonstrated the effort to maintain good profit margin on sales, as 66 per cent of retailers reported that prices have risen since last year, compared with 9 per cent saying they had lowered a bit.
This could be worrisome for the Bank of England, who wants to come off the idea that inflation will soon engage itself. The Bank of England is still dealing with the fact that inflation is tracking along higher than the 2.0 target rate, set several months ago.
The strong figures do demonstrate a certain consumer confidence, which has not been present in some time. Although the thoughts of coming totally out of the recession, could be squelched by the new government set austerity measures, which will be enacted in the fall.
Lai Wah Co, head of economic analysis at CBI commented on the uncertainty of future spending in saying: “Retailers are hopeful that strong sales growth will continue next month. However, the broader outlook for consumer spending is still uncertain, given the sales tax rise next year, subdued pay awards and the parallel of public spending cuts to job losses.”
The CBI survey was administered between the span of July 27 and August 11 and a total of 133 retailers participated.