It seems that shoppers are taking advantage of the big price cuts made by stores across the UK and people have a bit more money in the pocket after a number of base-rate cuts. This is reported in the same week that it was reported UK inflation has fallen again to 3% in January 2009, whilst it has risen slightly in the US by 0.3%.

How do you fancy another £20 billion pumped into the economy in the way of a freeze on stamp duty and a £1,000 tax credit to home buyers. In comparison to some of the billions of Pounds banded about across the world, this would seem like a drop in ocean. Richard Branson has spoken out over bail-out cash for industries other than the banks saying that he thinks “companies need to stand on their own two feet, and the weak ones need to go to the wall”.

Germany has approved a 50 billion (£44.4 billion) stimulus package which tax relief and infrastructure investments and money for families with children. This package also includes a 2,500 bonus to people who give up their cars to buy new ones, which is a different approach to pumping bail-out cash directly into the motor trade.

End of the week saw:
Stock exchanges:
FTSE 100: 3,889
DOW: 7,366
S&P: 770.05
Nikkei: 7,416

Currencies
UK Sterling £ to US Dollar $ 1.43884
UK Sterling £ to Euro € 1.12572
UK Sterling £ to Japanese Yen 134.372
UK Sterling £ to Aus $ 2.23815
US Dollar $ to Euro € 0.781869
US Dollar $ to Japanese Yen 93.3920

Commodities
Nymex Crude oil – $39.80
Gold – $994.40

The John Lewis department store chain said trade was down a disturbing 7.6% in the seven days to October 18 – the week when the government was forced into an emergency bail-out of three of the UK’s biggest banks.

It is the fifth consecutive week of sales declines for the department store.

The retailer said sales were hit by the different timing of school half term breaks in different parts of the country, but there was also a dip on the Saturday compared with the same Saturday last year when England played South Africa in the rugby world cup final in Paris and high streets were quiet.

Only one store, in Aberdeen, recorded sales higher than last year and 17 were down by more than 10%. The worst performing outlet was Peterborough, down 25% on a year ago.

Growth has also slowed rapidly at the department store’s online business. JohnLewis.com was recording annual gains of more than 20% until recently, but is now up just 5.7% on last year.

Earlier this week, a survey showed that internet spending in September was up 15%, compared with the 73% growth recorded 12 months earlier.

The worst performing John Lewis departments were those selling homewares, which were down 13.5% on a year ago. Electricals and home technology were down nearly 10%, although fashion sales were ahead 0.9%.

The company said it believed other retailers were performing even worse. “We know that if it’s tough for John Lewis, the chances are it’s even tougher for everyone else. Our task remains to outperform the wider market and all indications are that we continue to do so,” the store said.

Earlier this week, Home Retail Group said recent sales at its Argos offshoot were down about 9% – the worst decline in the chain’s 35-year history.

Debenhams said sales had fallen 4% in recent weeks while PC World is down 11% in the past six months and Currys is down 7%.

A raft of retailers have announced cuts in investment spending to conserve cash.

House of Fraser and Debenhams have been cutting prices to pull in shoppers, which is bound to hit profit margins. Over the past two weeks, HoF has been running a mid-season sale, while Debenhams has just had another day of “blue cross” discounts.

John Lewis’s Waitrose supermarkets are also under pressure as shoppers trade down to cheaper grocers and brands. Sales at the upmarket chain last week were ahead just 0.5% on last year’s levels – including the impact of inflation.

Economist Howard Archer of Global Insight said the financial crisis and fears about the economy had given already-nervous consumers another jolt: “Given that John Lewis’ department store sales are seen as a good bellwether for the health of consumer spending, the 7.6% year-on-year plunge in sales intensifies fears that retailers are in for an extremely difficult Christmas and beyond.

“There is no getting away from the fact that this is a very disappointing and worrying performance that bodes ill for the retail sector in general.”

Freddie George, retail analyst at Seymour Pierce, said: “Our major concern is that retailers, particularly the apparel retailers, are facing both weak sales in the lead up to Christmas and greater promotional activity, which will impact margins.”

News reported by The Guardian

High street sales rose 1.2% in August to stand 3.3% higher than a year ago. Analysts had expected a 0.5% drop after a swathe of gloomy surveys.

Clothing and shoes sales led the increase – buoyed by back-to-school shopping – but food sales fell 0.2%.

The report flies in the face of reports which predicted consumers would cut back amid the current economic gloom.

Recent surveys from the CBI and British Retail Consortium had painted a considerably darker picture of prospects for retailers.

Gloomy future

They blamed surging inflation, rising costs and bad weather for denting consumer spending, with the CBI branding it a “summer to forget” on the High Street.

But while the monthly and annual ONS figures were positive, sales in the three months to August fell 0.8% compared with the previous three months – the biggest drop since November 1990.

Analysts added that following a raft of bad news from the financial sector, sales were likely to slip back in coming months.

“With consumer confidence plunging in the wake of soaring inflation, falling asset values and rising unemployment the official retail sales will inevitably correct lower,” said ING economist James Knightley.

News reported by The BBC

A balance of 46% of retailers reported a fall in sales in the first half of August compared with a year earlier, said the CBI business organisation.

This was the second month in a row that the CBI’s distributive trade survey had posted a record low.

With only supermarkets reporting a rise in sales, the CBI said it had been a “summer to forget” on the High Street.

Higher bills impact

The CBI said higher bills and this summer’s bad weather had deterred spending.

“This has been a summer that many retailers would rather forget,” said Andy Clarke, chairman of the CBI distributive trades panel and Asda director.

“The downturn in the housing market is continuing to depress sales for those shops selling big-ticket items.”

The CBI survey is just the latest study to indicate that the UK economy is now weakening, with some analysts saying there is a risk it could slide into recession.

The most recent official figures from the Office for National Statistics showed that UK economic growth came to a standstill in the first quarter of this year.

The figures contrast to the most recent ONS figures on retail sales, which showed a modest recovery.

News reported by The BBC

A balance of 46% of retailers reported a fall in sales in the first half of August compared with a year earlier, said the CBI business organisation.

This was the second month in a row that the CBI’s distributive trade survey had posted a record low.

With only supermarkets reporting a rise in sales, the CBI said it had been a “summer to forget” on the High Street.

Higher bills impact

The CBI said higher bills and this summer’s bad weather had deterred spending.

“This has been a summer that many retailers would rather forget,” said Andy Clarke, chairman of the CBI distributive trades panel and Asda director.

“The downturn in the housing market is continuing to depress sales for those shops selling big-ticket items.”

The CBI survey is just the latest study to indicate that the UK economy is now weakening, with some analysts saying there is a risk it could slide into recession.

The most recent official figures from the Office for National Statistics showed that UK economic growth came to a standstill in the first quarter of this year.

The figures contrast to the most recent ONS figures on retail sales, which showed a modest recovery.

News reported by The BBC

The Office for National Statistics said retail sales were up 0.8% last month, reversing a sharp fall of 3.9% in June.

Analysts had been expecting a drop of 0.2% as cost-conscious consumers continue to struggle with high fuel and food bills and mortgage repayments.

The data was questioned as it clashed with evidence hinting at grimmer news.

Disputed

The British Retail Consortium (BRC), which produces its own survey of retail sales, disputed the idea that July’s sales were higher than June.

“The UK consumer is down but by no means out” Geoffrey Dicks, Royal Bank of Scotland

“Consumer confidence remains low, unemployment is rising and the housing market weakening,” said Stephen Robertson, BRC director general.

“It’s hard to see what could produce the sales growth boost ONS are reporting or their finding that smaller retailers are outperforming larger ones,” he added.

The ONS figures measure the volume of sales and some experts believe the value of transactions gives a more accurate picture of High Street conditions.

Some economists were also sceptical that the data, which has caused controversy since May figures showed a surge in sales of 3.6%, reflected the reality on the High Street.

“There has not been this level of volatility in the ONS monthly sales data in three decades,” said David Page, an economist at Investec.

Consumer resilience?

The ONS monthly figures for July cut the annual rate of growth to 2.1% – the lowest in two years.

But this was still only modestly lower from the 2.2% year-on-year rate recorded in June.

Retailers across the board reported a good month in a sign that the consumer slowdown may not be as sharp as feared.

Food sales rose 0.3% as shoppers hunted out bargains at discount stores, such as Aldi and Lidl, as well as budget lines within the bigger supermarkets.

Sales of household goods and clothing also held up well, although the ONS pointed out they were coming off a very low base with falls in June.

“Despite an intensifying squeeze on household budgets, the UK consumer is down but by no means out,” said Geoffrey Dicks, an economist at Royal Bank of Scotland.

Rising prices

The better-than-expected figures came even as retailers were forced to raise prices to prevent inflation from eroding their bottom line.

Prices on average rose to their highest level since 1998 – up 1.6% compared to a year ago.

This was largely driven by the soaring cost of food, which rose at the fastest pace since 1992 – up more than 6%.

With annual consumer price inflation – which rose to 4.4% in July – beginning to feed into retail prices, an imminent interest rate cut remains unlikely, some economists observed.

But many also concluded that July’s figures did not represent a pick-up in consumer confidence and sales were likely to weaken in the coming months as the economy slows further.

News reported by The BBC