Sales fall, prices rise in Britain
By Peter Griffiths and Fiona Shaikh |
March 25, 2011, Friday
|
Print Edition
Print Edition
BRITISH retail sales fell more than expected in February, reversing half of January's rebound. Volumes were hit by the biggest jump in prices in 17 years, which was only partly due to the rise in VAT, official data showed yesterday.
The ONS said sales volumes, including automotive fuel, fell 0.8 percent last month after a downwardly revised increase of 1.5 percent in January. That was bigger than the 0.6 percent decline forecast by analysts and took sales up 1.3 percent on the year.
Prices, including fuel, leapt at their fastest monthly pace since 1994, up 2.5 percent. Excluding fuel, prices were 2.4 percent higher on the month - the biggest rise since the series began in 1988.
The figures come after data this week showed consumer price inflation accelerated to a 28-month high in February and highlight the dilemma faced by Bank of England policymakers who are trying to curb price pressures without damaging the recovery.
"Slightly higher-than-expected inflation data would have put an additional dent into the volumes ... so you've got a combination of weak cash spend and higher inflation," said Ross Walker, economist at RBS. "It's flagging a downside risk for growth GDP."
High inflation, muted wage growth and the uncertain economic outlook are expected to weigh heavily on consumer spending in the months ahead, dampening a recovery in the economy which has in the past been heavily reliant on consumer spending.
The weak housing market is also having an impact on retail sales. The ONS figures showed sales at household goods stores fell 2.5 percent in February, the biggest drop in a year.
The ONS said sales volumes, including automotive fuel, fell 0.8 percent last month after a downwardly revised increase of 1.5 percent in January. That was bigger than the 0.6 percent decline forecast by analysts and took sales up 1.3 percent on the year.
Prices, including fuel, leapt at their fastest monthly pace since 1994, up 2.5 percent. Excluding fuel, prices were 2.4 percent higher on the month - the biggest rise since the series began in 1988.
The figures come after data this week showed consumer price inflation accelerated to a 28-month high in February and highlight the dilemma faced by Bank of England policymakers who are trying to curb price pressures without damaging the recovery.
"Slightly higher-than-expected inflation data would have put an additional dent into the volumes ... so you've got a combination of weak cash spend and higher inflation," said Ross Walker, economist at RBS. "It's flagging a downside risk for growth GDP."
High inflation, muted wage growth and the uncertain economic outlook are expected to weigh heavily on consumer spending in the months ahead, dampening a recovery in the economy which has in the past been heavily reliant on consumer spending.
The weak housing market is also having an impact on retail sales. The ONS figures showed sales at household goods stores fell 2.5 percent in February, the biggest drop in a year.
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