British retail sales rise as cold weather boosts clothes demand

Staff Writer
Columbus CEO

(c) 2013, Bloomberg News.

LONDON — British retail sales rose in November, led by clothes as colder weather boosted demand for winter wear.

Sales including fuel increased 0.3 percent from October, when they dropped a revised 0.9 percent, the Office for National Statistics said Thursday in London. That matched the median forecast of 23 economists in a Bloomberg News survey. From a year earlier, sales gained 2 percent.

Bank of England Governor Mark Carney said this week that a recovery has "taken hold" after the economy grew 0.8 percent in the third quarter and business surveys pointed to continued growth in the current quarter. The outlook for consumer spending is improving, with data this week showing inflation is easing and unemployment is at the lowest in 4 1/2 years.

Clothing sales surged 3.8 percent in November from the previous month, when they dropped 3.4 percent because of mild weather, according to the statistics office. Food sales increased 0.2 percent and sales at department stores dropped 3.1 percent, the most since February 2011.

The ONS said the weakness in department store sales partly reflects retailers' investment in their websites and a transfer of business to the internet. Online sales accounted for 11.4 percent of department store transactions last month, up from 9.9 percent in October. Internet shopping accounted for 11.9 percent of all retail sales, it said.

Excluding fuel, retail sales rose 0.4 percent in November from October and were up 2.3 percent compared with a year ago.

The retail sales deflator, a measure of changes in shop prices, fell to 0.6 percent from 0.7 percent, the lowest in seven months. The deflator on food sales dropped to 2.7 percent, the lowest in more than a year.

Consumer spending may remain under pressure into 2014. While inflation has eased to 2.1 percent, it's still outpacing wage growth, at 0.8 percent. At the same time, Britain's largest utilities are increasing their electricity and gas charges, hitting households.

With the recovery not yet assured, BOE policymakers have said they won't rush to raise interest rates. Under Carney's forward guidance, the BOE has said it won't consider tighter policy at least until the jobless rate falls to 7 percent. Unemployment was 7.4 percent in the three months through October.