UK Retail Sales Barely Grow As Consumers Subdued By Inflation
UK retail sales barely grew in January, more evidence consumers are reluctant to splash out amid a squeeze from rising prices.
Sales increased 0.1% from December, far below the 0.5% gain forecast by economists in a Bloomberg survey. From a year earlier, sales rose 1.6%, the weakest for a January in four years, the Office for National Statistics said on Friday.
One of the bright spots was sales of sporting equipment, reflecting the traditional New Year enthusiasm for workouts and a pickup in gym membership. Food sales fell 0.4% on the month.
British consumers are only slowly recovering from a period of shrinking real incomes after the 2016 Brexit vote pushed the pound lower, triggering a spike in inflation.
While the Bank of England sees wage growth improving this year, it also says it will need to raise interest rates to keep prices under control.
The ONS said the longer-term picture for retail sales is a “continued slowdown.” On a three-month basis, sales rose 1.5% compared with January 2017, down from rates above 4% a year ago.
The BOE’s latest outlook won’t do much to lift UK retailers’ spirits. It said this month that consumption growth will “remain subdued in the near term.”
Home furnishings retailer Laura Ashley said on Thursday that sales fell in the second half last year and that margins were being pressured by the pound’s drop.