MNI DATA IMPACT: UK Retail Sales Inch Higher, Led By Apparel

UK retail activity expanded modestly in August, lifted by a unexpectedly-large increase in clothing and footwear sales, data released Friday by the Office for National Statistics showed. However, the recent rebound in the sector has done little to allay fears of a bloodbath in an industry that was already suffering before the shock of Covid-19

Retail sales increased 0.8% in August, slightly outpacing analysts' forecasts, taking volumes 4.0% above pre-pandemic levels. Sales rose by 2.8% over the same month a year ago, and increased by record-high 16.7% on a rolling three-month basis.

Clothing and footwear accounted for much of the modest increase, jumping by 13.5%, the largest rise among the retail sub-sectors. However, clothing and footwear sales fell by 15.5% over August of 2019 and remain 15.9% below pre-pandemic levels.

Despite the steady recovery in retail sales, industry leaders have reported extreme concern over the ability of retailers to meet quarterly rent payments at month end, as noted in the latest MNI Reality Check. According the the latest ONS Business Impact of Coronavirus Survey, 17.4% of wholesalers and retailers are holding fewer than three months cash reserves; 3.3% have no cash reserves at all.

ONLINE SALES

Internet sales fell by 2.5% in August, extending July's near-7% fall. That took internet transactions to 28.1% of all sales by value, down from a record-high of 33.5% back in May. However, internet sales remain 51.6% above year-ago levels.

Petrol sales sales increased by 3.3% in August, the fourth-straight monthly increase, but remain 8.7% below pre-pandemic levels. Excluding fuel, prices were unchanged in August, the weakest annual showing since April of 2019. The deflator for clothing and footwear declined by 1.1%, with seasonal pricing patterns disrupted by Covid.