BRC warns of fragile consumer confidence

The British Retail Consortium (BRC) will warn this week that consumer confidence remains fragile, despite a small increase in high street sales last month. The BRC's monthly sales monitor is expected to show like-for-like sales in August rose by about 1.5 per cent on the same period last year, driven mainly by a strong performance from the major supermarkets.

But it will claim that August 2005 was a bad month for retailers, and warn the rise - which follows a bumper month for high street sales in July - should not be interpreted as a sign that further interest rate rises are needed. The Bank of England raised rates by a quarter-point to 4.75 per cent last month. That reversed a cut made a year previously, surprising many observers.

The uplift in August sales follows an encouraging performance in July, when exceptionally hot weather led to a significant jump in sales of alcohol and summer clothing. Like-for-like sales on the high street rose by more than 3 per cent that month, despite the sweltering heat, according to the BRC. That followed a rise of more than 2 per cent in June.