Retail sales seen slipping again in July
Retail sales are expected to have fallen for the second consecutive month in July as tighter credit conditions and high energy and food costs force consumers to break with their past spendthrift ways.
Inflation driven up by petrol and foodSuch a drop would add to the recent crop of economic data which have showed the economy is losing momentum and may yet topple into recession, raising expectations the Bank of England will need to cut interest rates, may be before the end of 2008.
A Reuters poll of 29 economists showed the consensus sees retail sales falling 0.3 percent in July, the second decline in a row but some way off the 3.9 percent drop recorded in June. Annual retail sales are seen up 1.7 percent.
Until June, official retail sales were better than economists' forecasts and other anecdotal evidence.
The range of forecasts for July, from -1.0 percent to 0.8 percent on the month, reflected the volatility of the series in past months after sales jumped by 3.6 percent in May, and economists' uncertainty about July's outcome.
"The numbers are hard to call, but sales are likely to weaken further in coming months in light of the various headwinds facing consumers," said George Buckley, chief economist at Deutsche Bank.
He forecast a fall of 0.5 percent on the month and expects the consumer would be hit further in coming months, for example inflation eroding real income growth.
A slip in retail sales will add to more gloom surrounding the sector. Earlier this month the British Retail Consortium reported that like-for-like retail sales fell by 0.9 percent on a year ago in July.
"Given the background of falling house prices, stock markets, stagnant real incomes and tighter credit conditions, we expect a run of falling sales volumes in coming months," said Peter Newland at Lehman Brothers in a note. He forecast sales would fall by 0.2 percent in July.
Department store group House of Fraser bucked the trend of recent bad news on the high street after reporting sales grew by 2.9 percent in the first half of the year compared to last year.
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