U.K. Retail Sales May Fall Next Year: Capital Economics

(RTTNews) - British retail sales is set to fall over the next year along with overall consumer spending, given an environment of general consumer weakness, Capital Economics said in a note on Monday.
However, retail sales are likely to fall a bit less than total spending over the year ahead, the firm said.

During previous recessions, retail spending fell as much as overall spending, if not more sharply, Capital Economics pointed out. But during the recent recession, retail sales surprisingly held up so well relative to overall consumer spending.


The fact that there are perhaps now more products on offer on the high street may have stimulated demand for retail goods, the firm said. Further, consumers may have started viewing a trip to high street as a routine, than a luxury.

Though there could be factors that underpinned retail over the non-retail sector, those factors are unlikely to last longer. The gap between goods and services inflation has narrowed and Capital Economics expects it to shrink further.

The flipside of a possible decline in retail sales is that firms off the high street, while also facing weak consumer demand, will not have to suffer the full onslaught of consumers' belt-tightening as they did in the recession, the firm added.

Read more at Forex Trader