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Drop in online shopping hits UK retail sales in August

London

BRITISH retail sales unexpectedly fell on the month in August after shoppers bought less online than the month before when major sales promotions encouraged them to splash out, official figures showed on Thursday.

But the figures gave little obvious sign that either the possibility of a no-deal Brexit on Oct 31 or a fall in sterling over the summer had dealt a major blow to consumer spending, which has solidly supported British growth in recent years.

Monthly retail sales volumes dipped by 0.2 per cent, the Office for National Statistics said, compared with an average forecast for a flat reading in a Reuters poll of economists and the first fall in three months.

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The category of "non-store retailing" - predominantly online sales dropped by 3.2 per cent, the biggest decline since August 2015 and a month after Amazon held its annual "Prime Day" promotion which helped boost sales by 7.6 per cent the previous month.

Compared with August 2018, sales were up by 2.7 per cent, slowing from growth of 3.4 per cent in July and again the weakest since May. The Reuters poll had pointed to annual sales growth of 2.9 per cent.

The figures broadly chimed with a British Retail Consortium survey that showed spending in August was flat on a year earlier, as shoppers cut non-essential spending.

But the picture is less bleak than that presented by the Confederation of British Industry, which said its members reported the biggest fall since 2008 in its gauge of retail sales in August, as sentiment crumbled in the sector.

British consumers appear to have largely taken the prospect of leaving the European Union in their stride, helped by weaker inflation and stronger growth in wages that are now rising at their fastest rate in more than a decade.

On Thursday the boss of Next , one of Britain's biggest clothing retailers, reported a rise in profits and told Reuters that disappointing sales in recent weeks appeared to reflect unusually warm weather, rather than Brexit jitters.

But some businesses are cautious as Britain's political crisis drags on.

Department store and supermarket operator John Lewis said last week a possible no-deal Brexit could worsen already difficult trading conditions after first-half operating losses at the group's department stores widened and that the impact could be "significant". REUTERS