Friday, 25 July 2008

Retail sales - flat this year

I meant to post this chart yesterday, but my internet connection is playing up. Anyway, better late than never.

Retail sales data is an early warning indicator that gives us some idea about the likely path of GDP growth. Since the credit crunch began, consumption expenditure has been holding the growth rate up. So are consumers still buying for Britain?

Looking at the retail sales growth rate is a little misleading. It jumps around a lot and it is hard to detect any trends. The actual index is a lot more interesting. The first thing to note is that the May data is implausibly high. It suggests that consumers went out on a spending binge and pushed the level up dramatically. The June data seems to return to a trend that appears to have started back in January. If we take out the May data, retail sales has been flat for most of this year.


Anonymous said...

May had five Saturdays. Would this have made a difference?


Anonymous said...

From an amateur to a professional: What I am never sure of with annual figures like these is what deflating factor they use to make the year on year/quarter on quarter figures. I assume there is a deflating factor - otherwise the comparisons tells us little or much less than that!

But if CPI is used, and in many people's understanding that is not a very realistic measure of inflation, what would these figures look like when deflated by RPI? I assume a little worse?

I wonder too about this in relation to published GDP: I hope it is not merely a cash comparison!

Thanks for these posts Alice,

B. in C.

economist said...

B. in C.

Normally, GDP is deflated with its own price deflator, which captures the prices of output rather than consumer goods.

ZED said...

christine - interesting - could be.

peterthepainter said...

christine and zed