Pre-Christmas sales give retailers unexpected boost

The cut-throat Christmas rush to part shoppers from their hard-earned cash began in earnest last month after surprisingly buoyant retail sales.

The 0.6% rise in October sales volumes caught the City's number-crunchers off guard, but the figure tallies with a bigger-than-expected fall in the cost of living, which the Office for National Statistics put down to a supermarket price war.

Shoppers are still ready to spend but retailers are having to work harder than ever for the business, the ONS said. "Feedback from retailers suggests that the monthly increase in sales volume and value was a result of pre-Christmas sales and in-store promotions."

Within October's numbers, the best performance was from "other stores", including toy shops, jewellers and computers, where sales volumes jumped 2.7% in a sign that Britons have kicked off their Christmas shopping in good time. The month's losers were department stores and furniture/DIY, which saw flat or falling sales.

The resilience on the high street is causing consternation among economists as unemployment hits a 17-year high of 2.62 million, while high inflation delivers a real-terms pay cut to million across the country.

Barclays Capital analyst Blerina Uruci said retailers had shown "surprising strength" given the news elsewhere in the economy.

"We would however point out that the retail sales data tend to be volatile so it is possible for the recent strength to be reversed in the coming months, especially as major retailers have been warning of very challenging trading conditions this Christmas."