Sectors: Retail

Excitement surrounding the World Cup has helped retailers, with sales of clothing, textiles and footwear all up amid the ‘feel-good mood’.

In its latest missive, the Office for National Statistics (ONS) reported that retail sales volumes for May were up 2.2 per cent on the same month for last year, with textile, clothing and footwear sales up 6.6 per cent and sales at food stores running 1.4 per cent ahead.

The figures would seem to suggest that, despite the challenging economic climate, expectations of cost-cutting measures in the emergency Budget and continually high levels of unemployment, the World Cup has triggered an increase in spending, with consumers keen to find a way to forget their troubles.

Jeremy Cook, chief economist at foreign exchange broker World First, said, ‘World Cup fever has helped out the high street in the past month. However, it is difficult to see how this can be maintained with the spending cuts due in the coming months. Unfortunately, the fortunes of 11 Downing Street will always trump those of the Three Lions.’

However, Mark Bolsom, head of the UK trading desk at Travelex Global Business Payments, interprets the data as part of a general economic recovery, saying, ‘This is a welcome piece of good news and shows the underlying resilience of consumers. Although the World Cup will have played a large part in boosting sales, it is consistent with recent upbeat data and it will reassure the chancellor that the UK economy is strengthening.’

A possible consequence of the figures is that they may heighten fears over a rise in inflation. The OECD recently stated that the UK should raise interest rates to 3.5 per cent before the end of 2011 to combat the inflationary threat.
The latest figures showed CPI inflation at 3.4 per cent, which is in line with the Bank of England’s predictions but is still causing concern among policymakers.