Calls for rate cuts as High Street sales suffer

The British Retail Consortium has backed calls for further interest rates cuts, as retailers suffered their worst July in a decade.

According to the latest BRC figures, retail sales in the UK fell 1.9% on a like-for-like basis and rose by 2% on a total basis, compared to 2004.

The three-month trend of growth also rose in July to –1.7% from –2.4% in June for like-for-like sales and to 2.3% from 1.1% for total sales.

The BRC said that sales worsened in July, due to cooler wetter weather than in June. There had been good clothing sales on the few warmer days, the BRC said, but it had failed to offset difficult trade elsewhere.

Consumers had remained “cautious”, the BRC said, and still seemed reluctant to commit to large purchases. Sales of furniture, floor coverings and large electricals continued to suffer.

Kevin Hawkins, BRC Director General said that last week’s reduction in interest rates to 4.5% by the Bank of England was “obviously welcome”, but more cuts were needed over the coming months. He said: “It will take several months for there to be any significant effect on consumer spending: more cuts are needed between now and Christmas.”

However, Helen Dickinson, Head of Retail at consultancy KPMG said that sales could have been much worse, with commentators and retailers fearing that the bomb attacks in London would have a negative impact on sales. Ms Dickinson said: “The sales figures in July will come as a surprise to many. Commentators and many retailers alike thought that the impact of events in London, coupled with a deteriorating trend throughout the year could have been much worse. We did see a fall in customer traffic across the month, but those that did venture out found good value in the promotions being offered. The performance of the food sector was the highlight for the month, assisted by the improved weather conditions.”

(KMcA/SP)