UK retail sales slip back despite food recovery, says BRC-KPMG

8th Sep 2015 06:59

(ShareCast News) - UK retail sales fell during August, though supermarkets fared better as the recovery in food sales accelerated.Like-for-like retail sales fell 1.0% in August compared to the same month in 2014, versus optimistic consensus forecasts of a 0.9% rise, while total sales fell 0.1%, according to the British Retail Consortium (BRC) and KPMG on Tuesday.Economists earlier warned that signs of weaker consumer spending would fuel belief that UK GDP growth was likely to ease back in the third quarter.However, in encouraging news for investors in grocery companies such as Tesco, Sainsbury and Morrison, the BRC-KPMG retail sales monitor reported that total food sales were up 0.3% in the three months to August, from a 0.1% quarterly rise announced a month ago.Furthermore on the food retail industry, the twelve-month average total food growth turned positive for the first time since August 2014.Helen Dickinson, BRC director general, said this was a clear improvement compared with July."This, coupled with a positive twelve month average for the first time since August of last year, suggests there may be cause for optimism for food sales following a prolonged period of stagnation," she declared.Non-food sales declined in August, for the first time since August 2014, with clothing, footwear, stationery, furniture, household appliances all suffering declines.LFL non-food sales for the past three months were up 2.5%, slipping from the 3.2% rise revealed a month before."As the summer bank holiday fell a week later this year, sales were pushed into September meaning top-line trends for August were inevitably dampened (along with the weather) versus 2014," KPMG maintained.Online sales suffered their slowest month for over two years, apparently hit by the same factors.Previewing the data on Monday, economist Howard Archer of IHS Global Insight said: "Given the key role that consumer spending has been playing in UK growth, if the BRC does report lacklustre retail sales in August, it would fuel belief that UK GDP growth is likely to ease back in the third quarter from the 0.7% quarter-on-quarter expansion that occurred in the second quarter."BDO also last week reported weak retail sales in August, with the weakest since the financial crisis as its rival survey showed a massive 4.3% drop compared to the same month last year.