Retail sales post slight recovery in June

Shopper on London's Oxford Street Retail analysts say shops have introduced their summer sales earlier than usual

Retail sales recovered slightly in June as stores started their summer sales early to attract customers, official figures have shown.

Like-for-like sales excluding petrol were 0.8% higher than May, said the Office for National Statistics (ONS). Compared with June 2010, sales were up 0.2%.

It comes after sales declined by a revised 1.5% in May from April.

Marks and Spencer is one of the main retailers to have already cut prices.

'Under pressure'

Philip Shaw, economist at investment group Investec, said: "The retail sales figures were much as we expected, with a strong bounce back in June partly reflecting early summer sales.

"That really implies that sales could fall back in July because of the change in timing of High Street discounting."

Mr Shaw added: "The overall assessment is that consumer spending remains under pressure."

Start Quote

At best, the majority of retail outlets are limping along and it is only a matter of time before more fall by the wayside”

End Quote Brian Johnson Insolvency practitioner

The official ONS figures come a week after the British Retail Consortium said early summer price discounting had slowed the rate of sales decline on the High Street.

The continuing weakness in the retail sector comes after a number of well-known names have gone into administration.

Firms that have had to call in administrators in recent months include Jane Norman, Habitat, Focus DIY, Homeform, TJ Hughes and Oddbins.

Other retailers such as Carpetright, HMV, Thorntons, JJB Sports, Comet and Blacks Leisure have shut stores.

Brian Johnson, an insolvency practitioner at chartered accountants HW Fisher, said the retail sector was "one of the busiest areas of our business right now".

He added: "At best, the majority of retail outlets are limping along and it is only a matter of time before more fall by the wayside."

Income squeeze

The weakness in the retail sector comes as consumers are struggling with higher fuel and food bills, and job insecurity.

ONS figures last month showed that UK households have seen the biggest fall in their disposable income for more than 30 years.

It said that in the year to the end of March real incomes - adjusted for inflation - fell 2.7%, a fall not seen since 1977.

It comes as UK petrol prices are at near all-time highs, and three of the big six energy companies have said they will be raising their electricity and gas bills in the coming months.

At the same time, the latest ONS data showed that food prices last month were 5.8% higher than June 2010 - the biggest annual rise since March 2009.

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