Retail sales recovery hurt by weaker fuel demand as prices shoot up
The return of summer weather last month helped retail sales recover despite a hit from weaker demand for fuel, according to official figures.
The Office for National Statistics (ONS) reported a 0.4% rise – a figure that grew to 0.6% when the effects of fuel sales were excluded.
It said stronger clothing sales drove the increase but fuel sales volumes were 1.2% lower – likely the result of a surge in pump costs due to rising global oil prices.
The bounce-back for overall sales followed an upwardly revised 1.1% decline in July compared to the previous month when wet weather was blamed for people shying away from summer fashion purchases in physical stores.
ONS senior statistician Heather Bovill said: “Retail recovered a little from the large fall seen in July, driven by a partial bounce back in food and a strong month for clothing, though sales overall remain subdued.
“These were partially offset by internet sales, which dropped slightly as some people returned to shopping in person following a very wet July. Fuel sales also fell, with increased prices hitting demand.”
Recent RAC data suggested that costs for both unleaded and diesel were up by more than 10p a litre since the beginning of August, reflecting the highest prices for Brent crude oil seen in 10 months.
The cost of oil has surged globally on the back of production cuts. File pic
Production cuts by Saudi Arabia and Russia have been blamed for the hikes, with pump prices likely to have further to go to reflect the current level for Brent.
The ONS data is keenly awaited as household spending accounts for a majority of the UK economy – currently flatlining.
A measure of activity covering manufacturing and services, though excluding retail, indicated a growing risk of recession ahead.
The S&P Global Purchasing Managers’ Index (PMI) said its readings on activity during September – which are subject to revision when full data becomes available – pointed to a contraction in quarterly output of 0.4%.
It was released as a closely-watched measure of consumer confidence showed improvement.
The GfK index, which measures consumer attitudes, showed a four point improvement for September but remaining well inside negative territory.
Joe Staton, the company’s client strategy director, suggested that its findings were more bullish amid the shifting sands of the cost of living crisis, with the headline figure now back in line with January 2022.
“The view on our personal financial situation for the past year and the next is registering marginal but welcome growth, while expectations for the UK’s wider economy in the coming year show a more robust six-point increase.
“And with less than 100 shopping days to Christmas, the four-point boost to the major purchase measure might offer some hope to retailers, who know all too well that many people face financial pressure in the run-up to this year’s festive season.”
The confidence readings were taken in advance of the Bank of England’s latest interest rate announcement though rate-setters did have access to the PMI data.
Their decision to maintain Bank rate at 5.25% was due to reductions in key inflation indicators but the nine-member monetary policy committee will have also been concerned by the recession risks flagged by firms taking part in the PMI survey.
Please use Chrome browser for a more accessible video player
Bailey: ‘We cannot be complacent’
That said, following 14 consecutive increases to tackle surging inflation, its rate-setting committee will be anxious to see if the move heralds a pick-up in demand, such as in consumer spending.
That scenario would be a concern as wages are currently outstripping the rate of inflation and any spending splurge would be seen as an added pressure.
While the Bank’s pause on rate hikes gives some security to borrowers that things like mortgage costs should not go up further for now, the governor signalled that it would have to act again if the pace of price rises accelerated and was clear that there was no prospect of a rate cut any time soon.
The taxpayer is to help drive the switch to non-polluting vehicles through a new grant of up to £3,750, but some of the cheapest electric cars are to be excluded.
The Department for Transport (DfT) said a £650m fund was being made available for the Electric Car Grant, which is due to get into gear from Wednesday.
Users of the scheme – the first of its kind since the last Conservative government scrapped grants for new electric vehicles three years ago – will be able to secure discounts based on the “sustainability” of the car.
Money latest: easyJet bereavement policy faces refund question
It will apply only to vehicles with a list price of £37,000 or below – with only the greenest models eligible for the highest grant.
Buyers of so-called ‘Band two’ vehicles can receive up to £1,500.
The qualification criteria includes a recognition of a vehicle’s carbon footprint from manufacture to showroom so UK-produced EVs, costing less than £37,000, would be expected to qualify for the top grant.
It is understood that Chinese-produced EVs – often the cheapest in the market – would not.
BYD electric vehicles before being loaded onto a ship in Lianyungang, China. Pic: Reuters
DfT said 33 new electric car models were currently available for less than £30,000.
The government has been encouraged to act as sales of new electric vehicles are struggling to keep pace with what is needed to meet emissions targets.
Challenges include the high prices for electric cars when compared to conventionally powered models.
At the same time, consumer and business budgets have been squeezed since the 2022 cost of living crisis – and households and businesses are continuing to feel the pinch to this day.
Another key concern is the state of the public charging network.
Please use Chrome browser for a more accessible video player
The Chinese electric car rivalling Tesla
Transport Secretary Heidi Alexander said: “This EV grant will not only allow people to keep more of their hard-earned money – it’ll help our automotive sector seize one of the biggest opportunities of the 21st century.
“And with over 82,000 public charge points now available across the UK, we’ve built the infrastructure families need to make the switch with confidence.”
The Government has pledged to ban the sale of new fully petrol or diesel cars and vans from 2030 but has allowed non-plug in hybrid sales to continue until 2025.
It is hoped the grants will enable the industry to meet and even exceed the current zero emission vehicle mandate.
Under the rules, at least 28% of new cars sold by each manufacturer in the UK this year must be zero emission.
The figure stood at 21.6% during the first half of the year.
The car industry has long complained that it has had to foot a multi-billion pound bill to woo buyers for electric cars through “unsustainable” discounting.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the grants sent a “clear signal to consumers that now is the time to switch”.
He went on: “Rapid deployment and availability of this grant over the next few years will help provide the momentum that is essential to take the EV market from just one in four today, to four in five by the end of the decade.”
But the Conservatives questioned whether taxpayers should be footing the bill.
Shadow transport secretary Gareth Bacon said: “Last week, the Office for Budget Responsibility made clear the transition to EVs comes at a cost, and this scheme only adds to it.
“Make no mistake: more tax rises are coming in the autumn.”
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike