Data disparities pose consumer conundrum

By Christina Fincher - Analysis

LONDON (Reuters) - House prices are tumbling, unemployment is rising and real incomes are being squeezed, yet Britons are still spending happily, if official figures are to be believed.

The trouble is no one believes them.

The FTSE all share general retail index .FTASX5370 has shed around 50 percent over the past year, the pound has tumbled to a 12-year low in trade-weighted terms and even the Bank of England has admitted that gloomy retail surveys are probably closer to the mark.

Unpredictable weather and the timing of holidays make retail sales data notoriously volatile but the resilience of the official data is striking when other indicators suggest the economy is on the verge of a first recession since the early 1990s.

Figures from the Office for National Statistics show retail sales in the three months to July were 3.9 percent higher than the same period last year.

That is virtually the same rate of growth as in the middle of 2007 when the economy was expanding at a breakneck pace and the "credit crunch" had yet to enter the general lexicon.

Business surveys paint an altogether different picture.

The British Retail Consortium calculates like-for-like sales have fallen for four of the past five months, while statistics from the Confederation of British Industry show retailers face their toughest trading conditions since records began in 1983.