Early summer sales increase trade on sluggish high street

RETAIL sales returned to growth last month after stores startedtheir summer sales early to attract cautious consumers, officialfigures revealed.

Volumes rose 0.7% month-on-month in June, the Office for NationalStatistics said, although this only partly offset a 1.3% decline theprevious month.

The moderate improvement in sales came as retailers such as Marks& Spencer and other clothes chains started their summer sales early,while home furnishing stores also put on big discounts.

The discounting helped household goods stores to increase theirvolumes by 2.6% compared to the previous month, while clothes saleswere up 0.6%.

Food retailers, including supermarkets, saw their volumes declineby 4.2% on the previous year, the largest fall since records beganin 1988.

And there was more bad news on inflation as the ONS indicatedthat food prices were up 5.8% year-on-year -- the highest sinceMarch 2009. The figures also revealed that non-store sales,including the internet, hit record highs. This underlines thesqueeze on the high street, which has been under great pressure inrecent months as consumers, whose wages are failing to keep pacewith soaring inflation, rein in spending in the face of fears overunemployment and the faltering economic recovery.

The early discounting comes after retailers, such as departmentstore chain TJ Hughes and fashion specialist Jane Norman, recentlyfell into administration as sales fell, while Mothercare,entertainment group HMV and chocolatier Thorntons have all announcedstore closures.

A recent report by Ernst & Young showed that retailers haveissued 26 profit warnings in the first half of 2011 -- more than thewhole of the previous year.

And economists have warned that July's sales are likely to beweaker because some of the summer sales that would normally havetaken place during the month have already taken place in June.

Labour's shadow chief secretary to the Treasury Angela Eaglesaid: "These figures confirm the disappointing news from the highstreet we have seen in recent months. As the ONS has said, theunderlying picture is flat with a very modest year-on-year increaseof just 0.4%.

"We need urgent action to boost jobs and consumer confidence andget our economy moving again.

"Temporarily reversing January's mistaken VAT rise would ease thegrowing squeeze on families and pensioners, give this stalledeconomy the jump-start it urgently needs, and so help get thedeficit down for the long term."

CAPTION: Shoppers are making a tentative return to the highstreet in a bid to take advantage of the early summer sales