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Five questions answered on the drop in UK retail sales in August

Why the fall?

Photograph: Getty Images

According to figures from the Office of National Statistics (ONS) retail volumes fell in August despite analysts expecting a rise. We answer five questions on the surprise drop.

By how much did retail sales fall in August?

They fell by 0.9 per cent according to the ONS. This was a surprise for analysts who expected a 0.4 per cent increase.

What’s responsible for the fall?

The ONS said the fall was due to consumers reining in spending, particularly on food.

Sales of food fell by 2.7 per cent in August compared with the month before.

Morrisons last week said higher levels of spending it had seen in London were not reflected in other parts of the country.

How do August’s figures compare to last year?

These latest figures, which are based on a monthly survey of 5,000 UK retailers including all large retailers who employ 100 people or more, are still up on the same time last year.

They’re 2.1 per cent higher than August last year, when the Olympics affected spending.

What does this all mean in relation to the economy?

Retail figures are considered an indicator of consumer confidence and the economy as a whole. The retail sector actually accounts for around 6 per cent of the UK economy.

However, according to latest estimates the economy grew by 0.7 per cent in the second quarter of the year.

What do the analysts say?

David Tinsley, UK economist at BNP Paribas, speaking to the BBC said:

"It is probably a sign that upbeat expectations were getting a little out of whack with what the economy is capable of delivering," he said.

"If there is an ex-post rationale for the decline in sales, it seems to be largely down to the weather. Food sales were exceptionally strong in July... as the temperature improved markedly. While August was also pleasant, that level of sales was probably difficult to sustain."

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