Thursday, December 16, 2010
Retail sales still rising
Posted by David Smith at 09:45 AM
Category: Thoughts and responses

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Retail sales rose by 0.3% between October and November, maintaining their upward trend for the year, though the sharp drop last January means the 12-month gain was an unspectacular 1.1%. The detail on the 12-month increase was interesting: "Predominantly food stores decreased by 1.3% this is the fifth consecutive fall, while predominantly non-food stores increased by 3.6%."

However, this pattern changed in the latest month: "Between October and November, total sales volume increased by 0.3%. Predominantly food stores increased by 0.6 per cent while predominantly non-food stores increased by 0.2%." The value of retail sales in November was 3.6% up on a year earlier.

So, reasonable momentum going into 2011, though January's VAT rise may mean we see a similar pattern to 2010, with pronounced weakness at the start of the year.

Meanwhile, the Bank of England will be concerned by a rise in inflation expectations. Its latest survey shows that people think the current rate of inflation is 3.9% and that it will stay at that level for the next 12 months. Medium-term inflation expectations are 3.3%. The Bank says it is watching these surveys like hawks. I doubt the monetary policy committee is yet hawkish enough to think about a rate hike. The survey is here.