Non-food sales recover to 2015 levels - BRC

UK retailers last month enjoyed their strongest year-on-year growth since Easter, but

The British Retail Consortium revealed that like-for-like sales rose 1.3% in August but this was lifted thanks to the 0.9% drop in the same month a year ago.

On a total basis, sales were up 2.4% in August versus a 0.3% decline in the same month last year.

This marked the strongest growth since Easter, above the three- and 12-month averages of 1.9% and 1.6%, respectively.

Shop price inflation edged up to its highest rate since September 2013 at -0.3%, from -0.4% in July.

Over the three months to August, food sales increased 1.8% on a LFL basis and 3.2% on a total basis, slowing further from the 3.4% in the three months to July but above the 12-month total average growth of 2.7%.

Over the same three-months, non-food retail sales in the UK increased 0.6% on a LFL basis and 0.9% on a total basis, versus a 12-month average of 0.6%.

In-store sales declined 1.4% on a total basis and 1.9% on a LFL basis, while online sales of non-food products grew 9%. Online penetration rate increased to 21.6% from 21% over the year.

Helen Dickinson, chief executive of the British Retail Consortium, said on the surface it was a welcome sight to see non-food returning to growth as shoppers’ attentions turned to homewares, autumn clothing ranges and the new school term.

"However, these figures tell a less positive story about the health of consumer spending than it might seem at first glance.

"Non-food sales have only just recovered to levels seen two years ago, after a dismal August in 2016; while strong figures for food are largely the result of rising prices, leaving growth in volume terms weaker than last year.

"Stark challenges lurk around the corner for the retail industry. Purchasing decisions are very much dictated by a shrinking pool of discretionary consumer spend, with the amount of money in people’s pockets set to be dented by inflation and statutory rises in employee pension contributions in a few months’ time."

The BRC’s survey is more upbeat than a recent take on the sector from the CBI, noted Samuel Tombs at Pantheon Macroeconomics, with the CBI having reported the slowest year-over-year growth in sales volumes since July 2016.

"The BRC’s survey usually is the better guide, because it covers the whole month, it includes more retailers and it is derived from actual sales data, rather than a balance of retailers reporting sales changes."

As the monthly figure was lifted by a weak level of sales in August 2016, which was not replicated in the official data, and shop price inflation edged up, "the picture is slightly weaker in inflation-adjusted terms".