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SUMMARY
This is the second of two articles on retailing activity in the current economic downturn. This article considers how the changing structure of the economy over the last decade has impacted on retail sales volumes. It compares the pattern of retail sales in the current recession to that observed in the recession of the 1990s. Notably, it examines why non-food stores appear to have (so far) performed better than food stores in the current recession.
It concludes that the observed growth in retail sales has been supported by falling retail prices and a flexible labour market that has limited the effect of unemployment on household consumption. It also identifies two factors that explain why non-food stores have performed more strongly than food stores in the recession: the changing structure of UK store types and relative price changes.
The Retail Sales Index (RSI) measures an element of consumer spending, which is used in compiling the National Accounts. The RSI is also one of the most timely short-term measures of economic activity and it is an important input to the evidence base used in macroeconomic management. The monthly Retail Sales Statistical Bulletin produced by the Office for National Statistics (ONS) provides estimates of the volume of sales (after the estimated effects of prices have been removed) and value of sales (total value of sales in current prices).
This is the second of two ONS articles on retailing activity in the economic downturn. The first article (Anagboso, 2009) focused on recent changes in the value of retail sales from 2006 to 2008. This article will examine volume estimates for retail sales with a focus on the last two recorded economic recessions. The article will be organised as follows:
* the RSI in context
* long-term view of the RSI against the backdrop of the UK economy
* consideration of why some retail sectors have (so far) performed better in the current recession compared to the recession of the 1990s
* conclusion
The RSI in context
The ONS Retail Sales Inquiry is the most comprehensive measure of retail activity in Great Britain. It measures movements in the average weekly sales of retailers in Great Britain. The RSI covers the activities of businesses selling goods directly to...