Thursday, July 21, 2011
Retail sales up, public finances poor
Posted by David Smith at 10:15 AM
Category: Thoughts and responses

Retail sales volumes rose by 0.7% in June, better than expected, thanks to some hefty discounting by retailers. Retail sales values were up by only 0.3%. There was some fascinating detail in the numbers. Overall retail sales volumes in June were just 0.4% up on a year earlier, while sales values rose 4%, reflecting higher prices (including VAT).

Within the volume numbers, however, there was a big 4.2% drop in food sales, a record. A lot of this is explained by higher prices, up 5/8%. In contract, non-store retailing (internet and mail order) was up by 24.4%. The share of internet sales in total sales rose from 8.5% to 9.9% between May and June. More here.

The public finances, meanwhile, continued to disappoint. The expected drop in the deficit is not happening. Net borrowing in June was 14 billion, up from 13.6 billion in June 2010. Cumulative borrowing in the first three months of 2011-12 was 39.2 billion, only fractionally down on the corresponding period of 2010-11.

The problem is on the spending side. Current receipts for the first three months of 2011-12 were 121.1 billion, up from 115.8 billion a year earlier. But currrent spending was also up, from 151.6 billion to 156.8 billion. Details here.


the difficulties on the spending side are coming, from debt servicing where presumably the inflation spike is impacting on CPI-linked borrrowing and a failure (so far) to cut cap spending sufficiently. otherwise revenues look to be the main miss; that's what happens when the budget targets 1.74% fiscal yr growth and the economy delivers only 1.0-1.2%.

Posted by: JD at July 21, 2011 11:55 AM

Will this rise in sales volume be sustainable? With not much confidence in the economy, will consumers spend their money? And when the effects of the government spending cuts fully set in, will we see more high street retailers collapse like Jane Norman or TJ Hughes?

Posted by: Marketinvoice at July 21, 2011 06:05 PM