Shopping days. Quick! There are only nine-and-a-bit shopping days left until Christmas! But please don’t be so quick that you miss the graph above. It shows what the Office for National Statistics calls “the underlying growth in the retail sector” for the 2,130 shopping days between the beginning of January 2010 and the end of October 2015. More specifically, it’s an index comparing each three-month period with the last, across three different metrics: the amount we’ve spent in shops, the quantity we’ve bought, and the average prices.
We’re buying, buying, buying… When it comes to our buying, up is the general direction. This is true of the latest figures: the quantity bought in the three months to October is almost one per cent higher than in the three months to July. But it’s also true in the longer term: this measure has been rising for 23 consecutive months, which is the lengthiest run since records began in 1996. The actual amount we’ve spent hasn’t increased so consistently, but a glance at the graph will reveal that it’s certainly increased over the past several years.
…because prices are going down. Why is this? Part of it is just that we’re freer with our cash after the downturn. But another part of it is the shrinking of prices. Whether it’s down to commodities getting cheaper, the rise of Internet shopping, or just good, old-fashioned discounting, the quarter-on-quarter trend in average store prices has been going down since around the middle of 2013. This coincides almost perfectly with those 23 months of growth in the quantity we’re buying.
A question of sustainability. There is much that is cheering about this. Everyday life has become more affordable, and we’ve responded by buying more, which is both a sign and a stanchion of a growing economy. But it also raises questions about sustainability. The shops can’t keep lowering their prices forever.
Interest fates. And – what is more fearful – we can’t keep spending forever. As I’ve pointed out in a previous To The Point post, a lot of our spending is being done on credit. Indeed, according to a recent survey, 35 per cent of people have already borrowed money to pay for Christmas gifts this year. What happens, then, when interest rates rise? This is the great and terrible question hovering above our economy as 2016 heaves into being.