UK retail sales growth picks up

Sales were boosted by spending during school holidays

UK retail sales in October rose at the fastest annual pace since May 2008, government figures have shown.

Data from the Office for National Statistics (ONS) showed sales in October were up 3.4% from a year ago.

Sales were up 0.4% from September, with the increase being driven by rising sales of clothing and footwear.

The ONS also said there was some evidence that shoppers brought forward shopping on the internet because of the postal strikes.

Fancy dress

The increase in clothing sales was partly the result of people buying outfits for Halloween, which this year fell on a Saturday during many youngsters' school holidays.

High Street spending is still holding up reasonably strongly in the face of some pretty adverse conditions for consumers

Jonathan Loynes, Capital Economics

Festive sales 'will start early'

The clothing and footwear effect was seen in figures of annual growth in non-food retailing, which reached 3.5% compared with 1.6% across food stores.

The increasing popularity of online shopping was evident as non-store retailing and repair showed the the biggest year-on-year increase with sales volumes up 15.8% on October last year.

"The figures confirm that High Street spending is still holding up reasonably strongly in the face of some pretty adverse conditions for consumers," said Jonathan Loynes, chief European economist at Capital Economics.

But he warned that spending on services could be down in the recession. Unemployment and the potential for tax rises meant the outlook for shoppers was "hardly rosy".

VAT is set to return to 17.5% on 1 January, up from the current level of 15% where it has been since November 2008.

Earlier this week, an accountancy expert told the BBC that festive sales were likely to come early this year, but the discounts would not be as deep as last year.

"There will be bargains but not to the same sort of scale as last year," said Don Williams, head of retail at BDO.