Retail sales in August grew at their fastest pace since mid 2004 and mortgage lending was at a three year high even though consumers had to swallow the recent hike in interest rates. Is it sustainable?
Groceries and durable household goods were the fastest performers with sales of flat screen televisions showing no signs of abating after World Cup fever made them the most popular purchase in June/July.
With increased sales came the first rise in average selling price of a basket of goods probably in response to higher utility costs for retailers.
Mortgage approvals for new house purchases increased to 120,000 from 119,000 in July but credit card borrowing rose only slightly by a comparatively paltry £200m indicating that consumers are still reluctant to increase their borrowing.
However, with another interest rate increase likely, rising unemployment and the erosion of disposable household income the scenario is not the best for continued improvement.
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Retail, pubs, clubs and restaurants