UK Feb retail sales slip back after fleeting bounce - BRC
Tuesday, March 8, 2005 12:16:30 AM
afxpress.com
LONDON (AFX) - UK retail sales in February slid lower as the effects of the winter sales period which had propped up January faded out and as shoppers were kept away by unseasonably cold weather. In its monthly retail sales monitor, the British Retail Consortium said like-for-like sales, which does not include expansion in floor space, fell 0.3 pct in Feb from a year ago, compared with a rise of 0.5 pct in January
The latest fall takes retail sales back to levels seen in the tough pre-Christmas period. The drop is also likely to lead to renewed fears that consumer spending has started on a downward spiral after the Bank of England put up borrowing costs 5 times since November 2003
Curiously, the weekend papers had left markets bracing for a much steeper fall in Feb. While the gilt market may suffer a fall from the actual number, it cannot be denied that consumer spending is starting to flag. Earlier in the year, the slump to near 25 year lows in official retail sales data for December had sent shock waves through the market. Bank of England governor Mervyn King who had at the time called on markets not to read too much into one month's data, may be forced to reconsider
The Bank of England's rate setting panel, the Monetary Policy Committee, meets this week to decide on interest rates but a no change verdict is expected on Thursday
"Consumers' concern about interest rates, the housing market and taxes continue to impact sales, particularly big-ticket furniture and electricals. Clothing and footwear also suffered, BRC said. Total sales, which includes expansion in floor space, rose 2.9 pct in Feb, well down on the 3.5 pct increase in Jan. The latest reading is just a shade stronger than the 2.5 pct gain in December. BRC Director General, Kevin Hawkins said the figures are a further confirmation that trading on the high street remains tough for many
"Whilst the January sales brought a temporary improvement for some retailers, trade took a downward turn when the deep discounting ended and footfall levels remained generally low throughout February - not helped by the bad weather across the UK," he added
He noted that Valentine's Day gave some stores a boost, but failed to make up for the rest of the month
Hawkins called for a reduction in interest rates to help build consumer confidence
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