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February retail sales reverse recent declines

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Written by: Paloma Kubiak
22/03/2018
February retail sales increased 0.8% in the month, driven by spending on food, non-store and the fuel sectors.

The 0.8% rise follows two monthly declines in December and January, resulting in an overall decrease of 0.4% in the three months to February. However, economists had predicted a smaller 0.4% rise for February.

Year-on-year, the growth rate came in at 1.5%, well below the 3.3% recorded in the year to February 2017.

While prices have continued to increase across all sectors, the Office for National Statistics (ONS) noted there is a slowdown in growth in the last two months, falling from 3.1% in December to 2.5% in February.

On internet sales, the ONS said online purchases accounted for 17.2% of all retail, up from the 15.6% reported in February last year.

Ben Brettell, senior economist at Hargreaves Lansdown, said while retail sales jumped, the champagne remains on ice for now.

“The monthly numbers are always volatile, and the underlying trend is still one of weakness. There’s also a risk of further disappointment in March, with the Beast from the East bringing economic disruption and keeping consumers at home.

“In particular, non-food bricks and mortar retailers have been struggling of late, as shown by the demise of the likes of Toys R Us and Maplin. Supermarkets are faring better, and were responsible for much of February’s sales growth.

“Yet the UK consumer has been surprisingly resilient in the face of economic uncertainty, and there could be some light at the end of the tunnel for those suffering a squeeze in household budgets. Figures released this week showed inflation falling back and wage growth ticking upwards. If real wages begin to rise again this could bode well for the retail sector.”

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