Overall high street sales rebounded last month despite the poor weather which left clothing and footwear sectors nursing their first fall in trade for nearly two years.
The increase in sales levels revived the prospect of a further interest rate rise before the end of this year.
National Statistics said today that sales in August rose by 0.6 per cent last month after sliding by 0.4 per cent in July.
The revival stunned analysts, who had forecast a drop of 0.3 per cent after British Retail Consortium and Confederation of British Industry reports showed sharp fall in high street activity. The declines were blamed on wet weather and rising interest rates.
Advertisement
The reports were reflected in data showing that the June-to-August quarter was the first three-monthly period since November 2002 in which textile, clothing and shoe shops had suffered a fall in sales.
However, National Statistics said: “Despite some retailer reporting negative effects from the relatively poor weather in August, most notably garden centres and clothing stores dependent on summer fashions, the usual August downturn in retail sales was slightly smaller than in previous years.”
Nonetheless, the office said that today’s data indicated an underlying retail slowdown with the headline growth rate, on a three-monthly basis, at its lowest since September last year.
In the City, the figures were viewed as a sign that fears of a consumer spending slowdown had been overplayed, and revived interest rate fears that had been quelled by low inflation data on Tuesday and modest wage growth statistics yesterday.
Philip Shaw, the Investec chief economist, said: “This was staggering news as nearly all the anecdotal evidence was pointing to another decline.
Advertisement
“We still think rates will be on hold for the rest of the year, but are somewhat less confident than before the data.”
Howard Archer, the Global Insight economist, forecast a rate rise in November, saying: “The relatively strong rebound indicates that recent reports of the death of the consumer may be premature.”
He added: “Nevertheless, August’s rebound was probably significantly influenced by significant discounting, highlighting the fact that shoppers are very price conscious.”
George Buckley, the Deutsche Bank economist, said: “Consumers still have spare cash to spend - the household sector may be proving more resilient to higher interest rates than expected.”
In America, consumer prices rose a modest 0.1 per cent in August according to figures released today.
Advertisement
The core rate of the consumer price index (CPI), excluding food and energy, also rose 0.1 per cent. Private economists had been predicting a 2 per cent rise in both figures.
The CPI has risen 0.1 per cent in each of the past three months.