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Last Updated: Monday, 5 September 2005, 23:01 GMT 00:01 UK
High Street sales under pressure
Shoppers on London's Oxford Street
Cash-strapped shoppers are cutting back on many purchases
Falling demand for furniture, carpets and electrical goods has hit sales on the UK High Street, according to the British Retail Consortium (BRC).

Like-for-like sales fell 1% in August, as consumer spending was squeezed by rising petrol prices and fuel bills.

Although the decline was an improvement on July's drop of 1.9%, it marked the fifth month in a row that like-for-like retail sales had fallen.

However, total sales rose 2.9% last month, the BRC said.

The consortium said that the rise in total sales was largely accounted for by seasonal inflation and new shop floor spaces becoming available.

Weak position

The BRC's survey found that mixed weather in August also led to a fall in food, drink and clothes sales.

The underlying position is still weak
Kevin Hawkins, British Retail Consortium

Many retailers were forced into heavy discounting last month, while facing rising labour, property and fuel costs, BRC director general Kevin Hawkins said.

The England cricket team's strong performance against Australia in the current Ashes test series was also thought to have kept many shoppers away from the High Street.

"The underlying position is still weak and unlikely to improve unless and until there are further cuts in interest rates and these work through to the consumer. Anything else is wishful thinking," Mr Hawkins said.

The Bank of England cut UK interest rates to 4.5% from 4.75% at the beginning of August, amid growing concern about slowing UK growth and consumer spending.

The downbeat BRC figures follow a report last week by the CBI which suggested that one in five retailers expect trade to worsen over the coming three months.

It was the first time in seven years that stores were more negative than positive about their prospects, the CBI's distributive trades survey said.


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