Summer bargains spark surprise surge in high street spending

The bargain offers, coupled with a rush to kit out children for the new school year, boosted retail sales in August by 1.2 per cent on July.

The figure for the month was up by 3.3 per cent on the same period last year, according to the Office of National Statistics (ONS).

Deep price cuts raised spending this August 3.3 per cent above the figure for 12 months earlier - though some experts are sceptical about the data

The details stunned City analysts who had been expecting a fall of 0.5 per cent on the month following a barrage of gloomy news from leading stores.

Just last week. John Lewis revealed a 27 per cent fall in pre-tax profits for the first half of its financial year, while Woolworths lost almost £100million in the same period.

Firms including Next, Homebase, Currys, Argos and Marks & Spencer have all spoken of tough trading conditions.

Some City analysts questioned the accuracy and reliability of the ONS figures, suggesting they paint a false picture.

Surveys by both the British Retail Consortium and the CBI have identified a severe downturn with suggestions that conditions are at the worst for 25 years.

However, the ONS  insists that its survey is more comprehensive and reliable than others.  

It said the jump in sales was driven largely by sales of clothes, helped by seasonal discounting, and shoes which got a boost as parents kitted out their children for the new school year.

Textiles, clothing and footwear sales rose 4.1 per cent on the month, putting them up by 8.8 per cent from a year earlier.

If the ONS figures are accurate, it would suggest that this will fuel inflation, making it less likely the Bank of England will cut interest rates soon.

However, analysts expressed doubt over the reliability of the figures and argued that the Bank's Monetary Policy Committee (MPC), which sets rates, will ignore them.  

Economist Howard Archer of Global Insight said: 'Regardless of what the hard data show, the prospects for consumer spending over the coming months look bleak.

'We still believe that the economy is headed for recession and there is a growing case for interest rates to be cut sooner rather than later.'

Nick Kounis, of Fortis Global Markets, said: 'Virtually all the other consumer-related data coming out of the UK suggest that a significant consumer retrenchment is under way that is pushing the economy into recession.'

Jonathan Loynes of Capital Economics said: 'These figures are still puzzlingly strong compared to the much gloomier message coming from the retail surveys, consumer confidence figures and anecdotal evidence.

'As such, we suspect that the MPC will treat them with a pinch of salt.'

Alan Clarke, UK economist at BNP Paribas, said: 'UK retail sales apparently surged in August, far stronger than consensus estimates. Despite dreadful summer weather, clothing and footwear sales surged.

'The credibility of the retail sales numbers has been seriously undermined by recent volatility and today's number will add to the doubt.'