The colours of autumn may have pushed the disappointments of summer from your mind, so allow us to remind you: it was quite a wet one. But the country’s weather patterns still didn’t manage to keep people off the high street. According to the Office for National Statistics’ latest figures*, the retail sector is booming. We spent about £7.4 billion a week in July of this year, contributing to a volume of sales that was 5.9% higher than in July the previous year.
The rising trends of the past 6 years
Our graph, below, puts this in a wider context – all the way back to January 2010. It uses the ONS’s preferred measure for recording the ‘underlying growth’ in the retail sector; which is to say, an index comparing each three-month period with the last, with special adjustments made to account for natural seasonal variations. And what does it show? That, when it comes to the amounts we are spending and buying, everything is on the up, up and up.
As shown by the grey line, the sums spent in the second quarter of this year were almost 8% higher than they were in the same quarter three years ago. As shown by the black line, the amount bought was almost 14% higher. This latter metric has now experienced 31 consecutive months of growth – which is the longest period since the ONS’s records began in 1996.
The prices are right…
Why is this? Perhaps it’s to do with economic confidence: we feel good about our current prospects, so we’re going out and spending. Not even post-Brexit uncertainty can stop us. Or perhaps the products in shops are simply becoming more desirable: all of us are hankering after the latest phones and fashions. Or is there another explanation entirely?
The final line on our graph – the red line – stands for the average price of items in stores. And, unlike the other two lines, it’s been going down since 2013. The average price is now roughly 6% lower than it was back then; a decline that has coincided almost exactly with our collective shopping spree.
So, perhaps we’ve found our explanation. We’re buying more because stuff is getting cheaper.
The ONS paper contains more details about these price drops. Between July of last year and July of this, the biggest fall in average prices came in what they call ‘fuel stores’. This 4.1% decline is probably due to the concurrent decline in the cost of petrol.
But what about ‘predominantly food stores,’ where the average price fell by 2.1%? Or ‘household goods stores,’ which recorded another fall of 1.6%? It’s clearly not all to do with petrol. The truth is that prices are coming down because, in many cases, shops are putting them down. Retailers are engaging in healthy competition with each other and with the online giants to bring customers the best deals.
And the best thing is, it seems to be working for everyone. Prices are going down, but the public is still managing to spend more. Customers win, retailers win. Long may it continue.