Plunge in retail sales

24 July 2008

The High Street has suffered its biggest monthly fall in sales since records began in 1986.

According to the Office for National Statistics, retail sales slid by 3.9 per cent in June, more than offsetting the unexpected 3.6 per cent rise in May.

Taken on a quarterly basis, which offers a less volatile measure of retail activity, sales in the three months to June were up by 0.6 per cent compared with the previous three months.

Business groups have been urging the Bank of England to consider cutting interest rates as a way of encouraging consumer spending.

Analysts are divided on the Bank’s future direction on rates. Some believe that inflation levels and risks mean that the Bank is unlikely to cut the cost of borrowing despite the pressures on business and the dampening of consumer activity. Others are predicting a series of interest rate cuts next year.