Skyeast Investment Corporation

Back to school and autumn clothing gave U.K. retail sales a lift last month, according to a new British Retail Consortium survey. However, the group warned retailers to expect tough months ahead given the fragile state of confidence among consumers.

Retail sales on a like-for-like basis, which strip out sales from new stores, increased 1% year-over-year in August. On a total basis, sales were up 2.8%. Like-for-like sales had risen 0.5% in July, while total sales had increased 2.6%.

But despite the rise, BRC said sales were often deal-driven and were in comparison with a "very poor performance" in August 2009.

"The good news is sales are still growing but anxiety about job cuts and tax rises is putting people off making major spending commitments," said BRC director general Stephen Robertson. "With the government about to detail its cuts and a VAT rise in prospect, retailers will be hoping consumer confidence doesn't slip over the next few months."

Sales of clothing & footwear strengthened in August, helped by back to school shopping and new autumn and winter clothing ranges. Food sales growth, on the other hand, slowed a little.

Homewares sales edged up but sales were often deal-driven, wih big ticket items affected by consumer uncertainty over job cuts and income prospects. The group also blamed a renewed weakness in the housing market for affecting sales in the furniture & flooring sector.

Meanwhile, non-food non-store sales, which include those ordered through internet, mail and phone, were 17.8% higher than a year ago, but BRC said this was "against an exceptionally weak" increase in August 2009.

Helen Dickinson, head of retail at KPMG, said sales had deteriorated marginally in August as the month progressed. "Despite the recent improvement in consumer confidence, my view is that people remain worried about how they will personally be affected by the fiscal tightening measures," she said. "The impact on spending will become more apparent as we move into the higher volume autumn months."

In the three months to August, like-for-like sales increased 0.9% from a year ago. Food sales increased 1.8%, while non-food sales rose 0.3%. Total sales were up 3%.

The BRC-KPMG Retail Sales Monitor survey measures changes in the actual value of retail sales, excluding automotive fuel. The survey measures the value of spending and hence does not adjust for price changes.

Latest official figures showed a 1.1% monthly rise in retail sales volume for July, led by a strong performance in the non-food sector. On an annual basis, sales had increased 1.3%. (Provided by RTTNews)