Retail sales up but can we believe the figures?
The Office for National Statistics (ONS) has today revealed UK retail sales increased by 0.4% in July compared to sales in June. Not only was the increase in July more than expected but it also takes the annual rise in UK retail sales to 3.3%. It is also worth remembering that June was a very strong month and the increase in July is more impressive due to this very fact.
However, as we have mentioned on numerous occasions, we need to look at the long-term trend rather than short-term volatility, which has seen many analysts and investors caught up in the hopes for a short-term recovery. The truth is that the UK retail sector was annihilated during 2008 and the beginning of 2009, when we saw a number of well-known companies struggle with large debts, with many going under. A number of businesses are still suffering today, mainly because of reduced liquidity in the banking industry which has placed more pressure on their cash flow, their profitability and ultimately their ability to trade.
Whether we are seeing a reduction in prices across the board to attract customers is again debatable but we will need to see more than just two months of impressive retail sales before we can call the end of the recession.
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