Retail sales continue to grow but the pace has eased markedly from the exceptional rate seen earlier this year. However Experian anticipates that the growth rate will pick up over the next few months.
The latest figures from the Office for National Statistics (ONS) showed that volumes rose by 0.4% in June-August compared with the previous three months. On the three-month compared with the previous three months comparison, this was the slowest rate since November 2013 for retail sales volumes excluding fuel.
The following table shows recent trends among the various retail sectors:
Key features of performance among the various sectors are:
- Predominantly food stores had a disappointing three months in June-August. The 0.3% decline in volumes was the largest since September 2014. While volumes remained firmly positive in the year to June-August – in contrast to the years of decline in the wake of the 2007 financial crisis – the latest outcome dents hopes that the sector is making a sustained recovery.
- Household goods stores posted an exceptionally large decline in August depressing the three-month on three-month movement to just 0.6%. But on a longer perspective the sector continues to benefit from rising real incomes and the housing market revival with volume growth of 8.2% in the year to June-August.
Retail sales volume growth has undoubtedly lost momentum in recent months. The latest three month movement shows growth at an annualised rate of 1.6% compared with over 8% at the turn of the year and 3.6% in 2015q2.
This slowdown has occurred despite the boost to household finances from zero inflation and steadily rising earnings, which yesterday’s labour market release showed to have reached 2.9%.
Given the strength of incomes and still high consumer confidence, we expect retail sales volume growth later this year to accelerate from recent rates, producing y-on-y growth in 2015 at 4.3%. Expansion will remain healthy in 2016, though not matching this year’s exceptional pace.