CUSTOMERS SPEND LESS AS INTEREST RATE RISE LOOMS
Britain’s high streets are in the grip of their worst summer for six years as shoppers hold back on spending amid uncertainty over interest rate rises, according to a new report.
The BDO High Street Sales Tracker recorded a 1.1pc drop in year-on-year sales for July, which means sales have fallen every month since May for the first time since 2009. This comes as the BANK OF England governor Mark Carney repeatedly predicts an imminent rise in interest rates
The report, which surveys around 85 medium-sized retailers with around 10,000 outlets, found all sectors have been hit by the sales downturn, with fashion down 1.4pc year-on-year, lifestyle goods down 0.5pc and homewares seeing a 1.1pc drop last month.
Sophie Michael, head of retail and wholesale at BDO, said: “The political landscape is still settling down after the election and speculation over interest rate rises is creating uncertainty in the minds of retailers and consumers.”
While the fall last month was not as marked as the 2pc drop in June, it is thought the high street is losing out as consumers choose instead to spend in bars and restaurants.
Ms Michael added: “If this trend of falling sales continues into August, 2015 will go down as a very gloomy summer on the high street.”
She said the fall in July comes in the face of a strong rise last year, while retailers have also been holding off from heavy discounting, which has seen fewer shoppers attracted on to the high streets.
Figures earlier this week suggested growth in Britain’s powerhouse services sector – which includes retail sales – cooled last month in the latest sign that economic expansion has eased since a robust second quarter. The closely-watched CIPS/Markit purchasing managers’ index (PMI) survey – in which 50 separates growth from contraction – showed a lower-than-expected reading of 57.4 in July.
Official retail sales figures for July are published on August 20 by the Office for National Statistics (ONS). Recent figures from the ONS showed an unexpected 0.2pc drop in sales month-on-month in June as shoppers bought less household goods, food and petrol, according to official figures.