Scottish economy: ‘Faint glimmers of hope’ on the high street

Scottish shopping sales rose by 1 per cent last month when compared with last year, offering “faint glimmers of hope” during the recession, the Scottish Retail Consortium has said.

However, the small rise, which represents the best growth over a 24-month period since the beginning of the year, was flattened out when inflation was taken into account.

Moreover, any encouraging signs observed in Scotland were put into perspective when compared with the UK as a whole.

The pick-up experienced by Scotland in September was of the same magnitude as the UK, but the Scottish level of growth remained 2.4 percentage points below the country as a whole.

The figures, released today by accountants KPMG and the Scottish Retail Consortium, followed yesterday’s inflation figures, which showed that inflation hit its lowest level for nearly three years last month.

Official figures showed that consumer prices index (CPI) inflation fell to 2.2 per cent last month, down from 2.5 per cent in August and the lowest level since November 2009.

But gas and electricity price rises are expected to push inflation higher over the next few months, after four of the “big six” energy firms announced hikes.

Experts predict energy bills, combined with rising food and petrol costs, will send inflation back up past 2.5 per cent and even as high as 3.5 per cent,
before falling again later in 2013.

The retail figures, published in the KPMG and SRC’s monthly monitor, showed that like-for-like sales, which does not include stores that have opened in the past year, were down -0.8 per cent.

Food sales were the best-­performing sector (+3.4 per cent), partly driven by promotions and discounts, particularly sales that gave shoppers a discount on petrol.

After a dire August, clothing saw a welcome pick-up, with some retailers reporting stronger sales than in the UK as a whole. The poor weather coincided with the best weekly sales and the month ended on a strong note.

Fiona Moriarty, director of the Scottish Retail Consortium, said: “These figures offer faint glimmers of hope after a disappointing summer for sales and two consecutive months of year-on-year falls. The situation in Scotland mirrors a slightly improving trend in the UK as a whole.

“Clothing and footwear performed well in September, thanks in part to demand for warmer clothing.

“However, it was a different story in other non-food categories, suggesting that many customers are still feeling the squeeze and postponing purchases, particularly of big-ticket items for the home. And overall, sales growth in Scotland has now been below the whole UK for 18 months in a row.”

She added: “Any modest revival in sales should be seen within a wider context of continual pressures on household incomes.”

A Scottish Government spokeswoman said: “Retailers can be assured we are doing all we can to strengthen their sector. We’re taking action to boost growth with a tax relief package worth over £500m this year, offering the most supportive business environment in the UK and reducing or removing business rates for three in five business premises across Scotland.”