Consumers may soon see a fall in the price of goods such as food and clothes, as retail sales and output prices fall and cast a shadow over the UK's economy.
The latest statistics from the British Retail Consortium (BRC) have revealed a year on year fall in the total value of retail sales between October 2007 and October 2008 of 2.2 per cent, amounting to the worst sales figures in three years.
Food and drink remains the only sector to see a rise in sales as Brits cut back on non-essentials and prepare themselves for a recession.
Commenting on the statistics, national director of retail and wholesale sectors at Barclays
Commercial Bank, Jeremy Rance, said:
"Consumers are concentrating their lighter pockets on the weekly shop, seeing increases in food and drink, whereas the more luxury items, such as clothing and footwear, continue to bear the brunt of frugality as people are holding back in anticipation of early sales this year before making larger purchases."
However, statistics released yesterday by the Office for National Statistics (ONS) show that output prices (the prices of goods leaving the factory) have fallen by one per cent, suggesting that products such as clothes and luxuries can afford to come down in price.
The statistics are particularly bad for the time of year, as a poor Christmas for retailers could spell disaster, commenting, director general at the BRC
, Stephen Robertson, said:
"These are seriously poor numbers, especially in the run up to Christmas. For the first time in three years total retail sales fell into negative territory – further evidence of how difficult trading conditions are for retailers.
"The negative sales figures reflect low consumer confidence. These are tough times for families and retailers, who are hoping the Bank of England's bold interest rate cuts will provide a much-needed boost."
The bank base rate
was slashed to 3 per cent last week, and has so far succeeded in lowering a number of mortgage
rates, yet experts believe that a rate cut alone will not save consumers and the UK economy.
In fact, Gordon Brown has even hinted at possible tax cuts as a means of stimulating the economy hoping that extra cash will help consumers revive retail sales.
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