Retail sales in the UK rose 0.6% during October in contrast to the previous month, according to reports issued by the Office for National Statistics (ONS). Despite analysts having forecasted that sales figures would fall during October, a slew of retail promotions have caused retail prices to drop by 0.4% during October, likely leading to the unforeseen rush of preholiday sales.
In addition, retail sales for small stores have also risen by more than 5% during 2011, the largest increase since late 2004. Analysts believe that the increased sales volume in smaller stores can be attributed to consumers choosing to spend their money at local shops in order to save gas money. Chief economist for the British Chambers of Commerce, David Kern, commented that although the retail sales were “better than expected,” the long-term forecast for retail sales still appears to be somewhat stagnant.
Other economists believe that the recent surge in sales may give hope that economic growth may be more significant than previously thought during the next few years. Nonetheless, experts expect consumer spending to continue to be relatively conservative until the economy stabilises. Many also believe that the continuing pressures on household income will cause reduced consumer spending during the next few fiscal quarters.
Despite the recent rise in retail sales, reports issued by several UK companies indicate that many are still struggling to maintain profitability with the economy in a state of uncertainty. Many larger companies are reporting problems meeting their projected annual profits. Interestingly, the monthly CCI (consumer confidence index) for October reached its lowest point since mid-2004, at 36 (nearly half the average for this time of year).
