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Last Updated: Tuesday, 5 September 2006, 12:02 GMT 13:02 UK
August slowdown hits retail sales
Brents Cross shopping centre
Interest rate rises could see consumers cut spending, the BRC says
Slowing High Street sales in August are prompting fears of more declines in consumer spending, the British Retail Consortium (BRC) says.

Like-for-like sales growth slowed to 2.5% in August, after July's 3.4% rise.

The BRC voiced concerns that rising interest rates and debt levels could lead to difficult times for retailers.

But experts said July's sales may have been flattered by their comparison with the 2005 figures, which were affected by the London bomb attacks.

However, the BRC shrugged off any claims that retail sales were showing signs of picking up.

'Uncertain'

"Any suggestion that we are seeing a significant and sustainable return to the sort of sales growth we were reporting two or three years ago is simply not supported by the evidence," said BRC director general Kevin Hawkins.

"The recent rise in interest rates has yet to work through to consumer spending or the housing market. The outlook for the next few months is therefore very uncertain."

BRC figures showed clothing sales slipped as stores brought clearance sales to a close, while food and drink sales dropped during the month as the heatwave came to an end.

But the cooling weather did spell good news on some fronts, encouraging more shoppers to venture back onto the High Street to snap up furniture and homewares.


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