According to reports, Britain’s high street enjoyed its best Christmas for three years, despite the odds of retailers expecting a slow holiday season in the midst of rising interest rates and consumer slowdown. Retail sales volumes leapt by 1.1% in December, official figures showed yesterday, smashing the City’s forecast of a 0.5% increase. The sales surge, which was the biggest one-month increase for 18 months and the best December performance since 2003, pushed the year-on-year rate of increase up from 3.1 to 3.7%.
“While a few quarters ago strong sales were happening against a background of heavy discounts, it appears now that consumers are still spending money despite a rising inflation environment,” said Audrey Childe-Freeman, an economist at CIBC World Markets. “The overall situation is likely to create further inflation concern at the Bank of England and it makes a further rate hike, possibly in February, very likely.”
Paul Clarke, director of retail and wholesale at Barclays business banking, predicted 2007 would see most retailers struggling. “Three interest rate rises in six months will not have done a lot for consumer confidence, and with utilities costs and rent prices remaining high, the coming months may prove tough,” “Those retailers who have a good strategy, do their bit for the environment and adopt a multi-channel approach, embracing the opportunities presented by the internet, will undoubtedly fare best in 2007.” He said.
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