–Sep Retail Sales inc. fuel -0.2% m/m; +0.5% y/y
–Sep retail sales ex fuel unch. m/m; +1.8% y/y

LONDON (MNI) – Retail sales fell for the second consecutive month
in September, as clothing and footwear volumes fell in reponse to the
highest annual rise in prices for more than 15 years, according to
figures released by National Statistics Thursday.

Retail sales volumes fell 0.2% on the month and were up 0.5% on the
year, below the median forecast for an increase of 0.3% on the month and
1% on the year. This was the first consecutive monthly fall in sales on
the month since January.

There was also a downward revision to August which now shows a
monthly decline of 0.7% compared to the originally forecast 0.5% drop.

The figures are likely to boost expectations that the Bank of
England could extend its program of quantitative easing at the November
Monetary Policy Committee meeting in response to weakening growth.

Excluding auto-fuel, retail sales were flat on the month and up
1.8% on the year, a little below the median forecast for an increase of
0.1% on the month and 2% on the year.

September sales volumes were hit by a 0.8% monthly drop in sales at
clothing and footwear stores. The decline was likely due to a rise in
prices, with the clothing and footwear deflator increasing to 1.4% in
September from -1% in August, the first positive outturn since June 1998
and the highest since February 1994.

Anecdotal evidence has recently suggested that clothing retailers
have faced higher prices for cotton and some analysts have also
suggested that a number of retailers may also be raising prices early
ahead of the VAT increase in January.

The overall retail sales deflator increased to 2.1% in September
from 1.5% in August. Excluding auto-fuel the deflator rose to 1.6% from
0.7%, the highest since January.

Volumes in September were also hit by a 0.5% decline in non-store
retailing on the month.

There were rises, however, in sales at department stores and
household goods stores of 0.2% on the month and other stores of 0.7%.

Both food and non-food sales increased by 0.1% on the month.

–London bureau: 00 44 207 862 7492; email: drobinson@marketnews.com

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