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By Lee Wild

Date: Thursday 21 Aug 2008

LONDON (ShareCast) - There were surprises all round today on news that retail sales jumped 0.8% in July despite the biggest rise in prices for more than a decade.

Analysts had expected figures from the Office for National Statistics to show a 0.2% fall for the month following a record tumble of 4.3% in June, revised down from 3.9%.

Sales for non-food stores leapt 1.3%, while food sales were up 0.3%.

Seasonally adjusted retail sales climbed 2.1% on a year ago, although that’s still the worst performance since the 1.4% reported in February 2006.

The monthly numbers are all the more impressive given that prices jumped 1.6% in July versus the same time last year, the largest rise since May 1998.

A 6.1% surge in prices at food stores, an increase not seen since March 1992, was largely responsible.

Today’s data sends a confused signal to economists who’ve been forced to digest a raft of gloomy data on growth and sales in recent months.

Last week’s report from the British Retail Consortium revealed a 0.9% slide in sales in July to make it four down months out of five.

“Frivolous shopping is off the agenda as most customers concentrate on value and durability and there are few signs the slowdown has yet bottomed out,” said BRC director general Stephen Robertson.

Meanwhile, the International Monetary Fund cut its forecasts for UK economic growth earlier this month to just 1.4% in 2008 from 1.8% previously and warned the country faced a tough two years ahead.

Next year’s growth will fall to 1.1%, predicts the IMF, much less than Chancellor Alistair Darling’s hopes for at least 2.25%.

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