Health and fitness resolutions help January retail sales grow
UK retail sales increased by a sluggish 0.1% between December 2017 and January 2018, far below the 0.6% projected by analysts. It increased by the same 0.1% in the quarter-on-quarter measure, according to the Office for National Statistics (ONS).
This is the lowest growth since April 2017, but is an improvement on the -1.5% month-on-month decline recorded in December 2017.
However, when compared to January 2017, consumer spending in January 2018 increased by 1.6%. The ONS said this is a slowdown on the 2.4% recorded in the previous year.
The main contribution to the year-on-year growth came from non-food stores, with sports equipment, games and toys increasing sales by 10.9%. Retailers suggested that New Year’s ‘get fit and lose weight’ resolutions had helped the upward trend.
This was offset by a decline in food store spending (-0.9%) as food prices continued to rise.
Ben Brettell, senior economist at Hargreaves Lansdown, said the monthly data is volatile, and it’s hard to draw firm conclusions from two months of disappointing numbers, but it now looks certain the longer-term trend is one of slowing growth in the retail sector.
However, he said: “There could be some light at the end of the tunnel. The Bank of England says wage growth is on an upward trajectory, while inflation may well have peaked. This means we could see an end to falling real wages in the coming months, which would provide a welcome fillip to cash-strapped households. Assuming pay growth figures over the next couple of months back up this theory, it still looks like the MPC will have the confidence to raise interest rates to 0.75% in May.”
Lisa Hooker, PwC’s consumer markets leader, added: “Given January is traditionally the time of year Britons think about new furniture and doing up their homes, this has affected the performance of household goods retailers. On top of this, many shoppers spent money on themselves over the Black Friday period in November, cannibalising the traditional January sales.”