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Taken from the BBC web site


Weather dampens High Street sales

Poor weather hit UK High Street sales in August, a survey for accountants KPMG and the Retail Consortium (BRC) has said.

Spending growth was the weakest since December 2003, rising just 0.6% from a year earlier in contrast to July's 1.7% year-on-year gain.

Retailers were forced to slash prices of summer clothing, with furniture and homeware sales also noticeably down.

Weak consumer confidence exacerbated the effect of bad weather, it said.

The BRC's numbers come a week after a CBI survey which said consumer sales were slowing sharply, with demand for groceries falling at the fastest rate in 21 years.

'Fragile' economy

The slow growth could also be attributed to the fact that the key August Bank Holiday fell outside of the survey period, the BRC said.

However, the BRC warned that early results suggested sales for the holiday weekend were down on 2003.

"These figures should sound warning bells... that the consumer economy is increasingly fragile in the crucial run-up to Christmas," said the BRC's director general, Kevin Hawkins.

The Bank of England (BoE) should therefore avoid putting interest rates up before the end of the year, he said.

The Bank's base rate is currently 4.75% after five quarter-point rises since November last year and many economists expect a further rise before the end of 2004.

"The timing of the bank holiday and the weather are part of the reason for the drop but this is not the whole story," said Helen Dickinson, acting head of retail at KPMG.

"Retailers have had to work really hard through heavy discounting to keep demand at this level... no individual sector had a particularly good month."

Holiday sales

Food and drink sales were boosted by hot weather early in the month, the survey found. Demand for cold convenience foods and drinks were hit by the wet conditions later in the month.

Computer retailers were helped by price promotions.

TV sales were down overall as many households had bought new sets ahead of the Euro 2004 football championships earlier in the year.

Sales of digital cameras and hard disk audio players rose, helped by the summer holiday season.

The weather also hit sales of garden equipment and furniture and suncare products but medicines, vitamins and fake tan cream were all beneficiaries.

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