Rise in UK retail sales expected

Official figures are expected to reveal a boost to British retail sales in July as extended sales clearances drew in cash-strapped consumers.

The Office for National Statistics (ONS) in the UK is expected to reveal a 0.4% increase in retail sales volumes last month, compared with a 0.7% increase in June.

The British Retail Consortium (BRC) retail sales monitor also showed an improvement in July with like for like sales up 0.6% on the year, recovering from June's 0.6% decline.

The improvement was driven by a pick-up in food and clothing sales after a poor June, the BRC said.

A consumer spending squeeze - driven by muted wage growth and high inflation - has seen retailers, such as Marks & Spencer, bring their summer sales forward to entice shoppers.

Victoria Cadman, economist at Investec, said she expects a similar performance in the ONS figures - but warned the underlying conditions were still tough with consumer caution continuing to hit big-ticket housing-related purchases.

She said: "Beyond the return to growth in clothing, benefiting from wetter weather and clearance sales and some growth for furniture and floor coverings, virtually all other categories saw slower growth or unchanged levels of trade."

The retail sector has had a torrid year with department store chain TJ Hughes, fashion specialist Jane Norman and interior designer Habitat falling into administration, while Mothercare, entertainment group HMV and chocolatier Thorntons have all announced store closures.

Elsewhere, a survey from Nielsen said summer weather had improved grocery sales in the UK, with headline value growth increasing to 3.7% from 1.9% in the four weeks to August 6.