Friday, May 18, 2007
Retail sales - down but definitely not out
Posted by David Smith at 09:45 AM
Category: Thoughts and responses

Official retail sales figures showed a surprise 0.1% fall in April but the Office for National Statistics chose to emphasise the underlying strength. The retail sales deflator (the measure of price increases) rose 1% in the year to April, its highest for eight years. This is the ONS's take:

"New figures from the Office for National Statistics (ONS) show that underlying growth in retail sales volume remains robust, despite a slight decrease in monthly sales volume in April.

"The volume of retail sales in the three months February to April was 1.2% higher than in the previous three months. This follows 0.5% growth in the three months to March and compares with an increase of 0.1% at the same time in 2006.

"Compared with the same period a year ago, total sales volumes in the three months to April 2007 were up 4.8%, the highest since November 2004."


So the underlying strength is

Retail sales down
Underlying Price Increases Up


Posted by: assetpriceinflation at May 18, 2007 10:00 AM

So, sales down but prices up? Seems to indicate to me that perhaps the MPC's assertation that retailers may have rediscovered their pricing power is wide of the mark, and the real explanation is increased operating costs (energy to run stores) and higher commodity costs for suppliers pushing up wholesale prices. If that's the case, the MPC has a lot less control over inflation than it has previously thought.

Posted by: Minh at May 18, 2007 10:46 AM

I think what the ONS means by underlying strength is the increase over the latest three months. They're always reluctant to pronounce on a single month, particular when it includes Easter, when seasonal adjustments are tricky.

You're right in one sense about whether the Bank has control over it - the biggest increases are in food prices, which Mervyn King was at pains to point out may be climate-related.

Posted by: David Smith at May 18, 2007 11:01 AM

I'm not a big shopper, but I notice there are been a large increase in the price of onions!

Posted by: Caravaggio at May 18, 2007 12:54 PM
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