Hope for retail sector as price cuts drive sales

Department store discounts helped drive a 0.2 per cent month-on-month increase in retail sales volumes in June. Picture: Jane Barlow

Department store discounts helped drive a 0.2 per cent month-on-month increase in retail sales volumes in June, according to the Office for National Statistics.

The rise builds on a 2.1 per cent hike in May and marks the first run of back-to-back growth in a year.

Yesterday’s official figures follow upbeat numbers earlier this week from the Scottish Retail Consortium.

However, economists warned that consumer spending remains under pressure from inflation which is outstripping wage growth. Data on Tuseday showed inflation rose to 2.9 per cent in June, while wage growth, excluding bonuses, is running below 2 per cent.

Martin Beck of Capital Economics said: “While on the face of it, a monthly expansion in volumes of 0.2 per cent in June looks like a fairly weak result in isolation, this is a decent out-turn after the hefty rise seen in May. Admittedly, with real incomes continuing to fall, the sustainability of a consumer revival remains in doubt. But, for now, retailers will no doubt be happy to make hay while the sun shines.”

Howard Archer, chief UK economist at IHS Global Insight, added: “The fact is that how much consumers spend remains critical for growth – despite the aspirations for the economy to become less dependent on the consumer and more balanced with greater contributions from investment and exports.”

SCOTT REID AND JANE BRADLEY