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Britons hit the shops this month having spent much of the summer paying off debts, latest figures reveal today.
Statistics from the CBI show most retailers reporting year on year sales growth after the vast majority of shops reported that sales were down in the first eight months of the year.
Even better, many retailers are telling the CBI they expect things to be just as good through the autumn as they have been this month.
The hope is that consumers may splash out on items such as sofas or electricals before VAT is raised back up to 17.5 per cent in January.
The CBI reported flat retail sales last month. Figures from the Bank of England suggested part of the reason why: consumers paid off their debts in August at the fastest rate since the last recession.
Economists expressed caution, saying the recent sales jump could yet be just a blip. Howard Archer, chief economist at forecasting consultancy IHS Global Insight, said: "Retail sales are holding up pretty well after losing momentum.
"Low mortgage payments, reduced utility bills and easing inflation are boosting the purchasing power of a good many people, thereby giving them scope to step up their discretionary spending.
"Even so, the suspicion remains that the upside for consumer spending will be limited for some time as consumers overall still face serious obstacles.
"These notably include sharply higher and rising unemployment, low earnings growth and heightened debt levels. Furthermore, many consumers are keen to limit their expenditure due to still serious concerns about the economy and their jobs, as well as a need or desire to improve their personal finances."
The Bank of England reported that the nation's borrowers last month paid back £506million in loans - including student loans but not mortgages.
Although credit card borrowing rose by nearly £200million last month - the usual seasonal rise when the country starts paying for its summer holidays - net consumer credit fell by £309million last month, the most paid back in a month since April 1993.
That followed net consumer credit repayments of £259million in July.
The decision by consumers to pay back so much came from fears about the economy or their own finances, according to economists, as well as the lack of money being lent by the banks or on interest rate terms most people could not afford.
Reader views (2)
Would this "flood" of shopping spendthrifts by any stretch include the army of skint members queueing outside Job Centre + emporiums up and down dumpUK?
Anyone up for a nice lunch of green shoots and humble pie?
- Ted, London, 30/09/2009 08:13
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If shoppers returned locally all they would find is empty boarded up shops - not one, not two but three of four adjacent shops all boarded up.
More spin and waffle from the CBI (quango?).
- Reuben Camara, Morecambe Compound, EUSSR, 30/09/2009 06:53
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