UK retail sales in August lowest since 2008

UK retail suffered the biggest decline in August as gross sales hit their lowest level since November 2008, when shoppers clamped down on spending.

Comparable sales in stores fell 4.3 per cent, dropping for a fourth consecutive month, according to business advisory firm BDO's  monthly report. Fashion retailers who reported a 5.5-per cent fall in sales, were the worst affected.

According to Nick Bubb, an independent retail analyst, the figures made ''sobering reading,'' Bloomberg reported. He added that BDO's fashion survey only covered ''relatively upmarket'' retailers, and did not represent the mass market.

Even as the economy recovered, only 47 pence of every extra pound in the pockets of UK consumers were going through the tills of retailers, with an increasing amount being spent on leisure activities and holidays, Exane BNP Paribas said in a research note Thursday.

Next Plc, Dixons Carphone Plc, Sports Direct International Plc and Home Retail Group Plc will report results next week. Next shares were down 3.6 per cent in the afternoon in London on Friday, with Dixons Carphone shares down 2.9 per cent.

According to commentators, the strength of the sterling meant UK citizens were spending more on their holidays than at home. The reverse was true in the UK with the strength of the pound meaning tourists had been more frugal according to BDO.

The retail data followed a survey on Thursday from financial data company Markit, which showed that businesses in the UK's services sector recorded their slowest growth in over two years last month, reflecting signs of economic weakness in the US and China.

Meanwhile, the Bank of England has been mulling when to start hiking interest rates, though financial markets did not expect it to act until next year, with inflation barely above zero in the UK.

According to BDO all retail sectors were subdued in August, with fashion sales down 5.5 per cent, homewares down 3.3 per cent and lifestyle goods falling by 1.3 per cent.