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Do September sales figures evidence economic recovery?

The Office of National Statistics’ (ONS) estimates of retail sales continued to show growth in the UK retail industry in its September 2013 monthly report. The quantity bought by consumers increased by 2.2% compared with September 2012 and by 0.6% compared with August 2013. With three-month on three-month growth rates increasing for seven consecutive months these estimates show an underlying trend of growth in the retail industry. Quarter-on-quarter, the quantity bought in the retail industry increased by 1.5%. This is the largest quarter-on-quarter rise since March 2008 when the economy as a whole was at its peak, before the economic downturn.

The figures contained within the ONS monthly reports are estimates based on a monthly survey of 5,000 retailers, including all large retailers employing 100 people or more. The timeliness of these retail sales estimates, which are published just two weeks after the end of each month, makes them an important early economic indicator. The industry as a whole is used as an indicator of how the wider economy is performing and the strength of consumer spending.

Of the four main retail sectors, non-food stores saw an increase in the quantity bought in September 2013 compared with September 2012, of 3.6%, whilst sales through non-store retailing (internet buying) increased by a massive 19.1%. Food stores saw a fall in the quantity bought of 0.6% and petrol stations (including supermarket petrol stations), a significant fall of 2.4% over the same period. Is there a tie-up between people wanting to fill up with fuel less and use their cars less, because of the high cost of fuel, and a trend where people will now drive less to large supermarkets for food shopping, preferring to shop more frequently and locally? Is this a significant reason why some large supermarkets retailers now develop smaller convenience store outlets, like Tesco Express?

The amount spent in the retail industry continued to increase, with September 2013 figures indicating that the amount spent increased by 3.2% compared with September 2012 and by 0.5% compared with August 2013. Non-seasonally adjusted data showed the average weekly spend in the UK in September 2013 was £6.8 billion. Store price inflation calculations indicated that price increases in the retail industry continued to slow, with average prices increasing 0.9% year on year compared with 1.6% in August 2013.

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