Consumers are facing pressures from every direction according to the latest data being released by the Office for National Statistics. Retail prices are reported to have risen at the fastest rate in three years yet wages are still down and worries intensify over a stalled economic recovery.
It is reported that numbers were in fact a bit better than had been expected but still the outlook is weak and economists are fearing that a bleak forecast could prompt another round of asset buying by the BoE in an attempt to boost economic growth.
Further noted is the fact that consumer confidence is low due to increased numbers of unemployed households and worries surrounding the debt crisis in the eurozone. Sales volumes fell by .2% which admittedly was better than the forecast of a .3% drop but just marginally. In addition, August was the weakest month of the year to date which has seen no growth since December 2010.
Nonetheless, those figures are not surprising against the backdrop of inflation. Prices are 4.7% higher than they were last year at this time, which is the fastest rate of inflation in retail prices since July 2008. This year has also seen the largest acceleration in the prices of footwear and clothing in 20 years, since 1991.
Adding to these concerns is the fact that unemployment rates are rising at the fastest rate in the past two years as evidenced by figures released for the second quarter of this year. According to Ross Walker, an economist for RBS, inflation is fuelling the fire and will keep job prospects low until inflation is under control. Employers are simply reluctant or unable to add to their payroll.
Clothing and footwear were not the only sales to fall in volume as it is reported that household goods and electronics are suffering as well, even though retailers drastically reduced prices. With prices rising, sales falling and the number of unemployed increasing by the day, there is no end in sight to the worries surrounding economic recovery.