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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (14578)	11/2/2004 8:40:00 AM
From: zonder	Read Replies (1) \| Respond to of 116555

UK - Strong Retail Sales And Weak Pricing Power? ................................................Oct.............Sep CBI retail sales........................+11.............-9 CBI sales - 3 month trend...........+1..............+6 BRC Shop Prices y/y..............-1.37%..............0.41% Two of the most important surveys of the health of the UK consumer were released today which produced a picture of relative buoyancy in sales, accompanied by negative growth in shop prices. The CBI retail survey showed an increase on the index reading in October to +11 from a previous -9. This has been a volatile data series which has proved to be a less-than-reliable guide to monthly trends in the official retail sales data. Nevertheless the more reliable three-month trend released by the CBI showed a deceleration to +1 in October from +6 in September. The October 3 month rate was the slowest pace of growth in 18 months. At the same time, the BRC released shop price data which showed an annual rate of decrease in prices in October (-1.37%) which was the lowest rate of change since 1997. Downward pressure in prices was broadly-based across sectors, with discounting evident in clothing, household goods , furniture and electronics. Conclusion: The jury is out on the UK consumer's propensity to spend going forward. While the CBI's forecasting record of tracking official data on retail sales is mixed and to some degree contradicts the official data, we can have fewer doubts about the inflation outlook in retailing. Both the official data and the surveys continue to show that whatever gains are being made in sales volumes are being achieved at the cost of price discounting. We do not see any strong ammunition here for the hawks on the MPC.