Retail sales tumble as grocery reverses

The year-on-year fall in the value of Scottish retail sales value last month is the steepest since that in January 2016. Both grocery and non-food sales value showed sharp year-on-year falls last month.

And the latest retail sales figures for Scotland are much worse than the weak figures for the UK as a whole.

Figures published last week by the British Retail Consortium showed the value of UK retail sales in January was up by only 0.1 per cent on the same month of last year. They had been up by 1.7 per cent year-on-year in December.

In December, the value of retail sales in Scotland had been up by an albeit more modest 0.7 per cent on a year earlier, even though the non-food sales category showed a 0.7 per cent fall. The year-on-year increase in December was driven by a 2.5 per cent jump in food sales value.

Food sales in Scotland last month were down 2.6 per cent on a year earlier in terms of value. And the value of non-food sales dropped by 4.3 per cent year-on-year.

The latest figures continue a pattern of weaker year-on-year movements in retail sales value in Scotland than in the UK as a whole.

The SRC has previously highlighted the boost to retail sales figures for the UK as a whole arising from the stronger economic and housing market performance in London and south-east England.

And economists have highlighted the broader impact of oil and gas sector weakness on overall Scottish gross domestic product in recent times.

Latest figures from the BRC and market researcher Nielsen show UK shop prices were down by 1.7 per cent on a year earlier in January. But BRC chief executive Helen Dickinson has highlighted “an underlying trend of building cost pressures that are gradually feeding through from the fall in sterling combined with higher commodity prices”.

Ms Dickinson, forecasting a “general upward trend in inflation over 2017”, noted food prices had risen month-on-month in January.

SRC director David Lonsdale said of the latest Scottish sales figures: “These are somewhat dreich retail sales results for January, showing a dip of nearly two per cent [in volume terms] even when falling shop prices are taken into account.

“After the extravagances of the festive period, which saw solid sales growth in December…, shoppers were clearly keeping a firmer grip on purses and wallets in January and focusing more on essential spending as lower footfall data for the period suggested.”

Craig Cavin, head of accountancy firm and SRC survey sponsor KPMG’s retail sector practice in Scotland, said: “After December’s strong festive figures boosted Scottish retailers, January blues have struck. Having splashed out over the Christmas period, shoppers were keen to save money, despite the sales bringing prices down.”

He added: “January is usually a difficult month for purses and wallets across the country, as consumers count the cost of Christmas. It appears retailers are also counting that cost.”

Households across the UK are having to deal with the impact of a surge in overall consumer prices inflation arising from the tumble in the pound in the wake of the Brexit vote last June.

Annual UK consumer prices index inflation climbed to 1.8 per cent in January, from 1.6 per cent in December, having been at only 0.3 per cent in May last year, official figures showed yesterday. And it is expected to rise significantly higher in coming months.

A survey published yesterday by pollster GfK showed nearly three out of four consumers in Great Britain, 74 per cent, think consumer prices have risen over the past year. And consumers expect more rapid rises to come, with an identical 74 per cent predicting a rise in prices in the coming 12 months.

In January last year, 52 per cent believed prices had risen over the previous 12 months. And 55 per cent predicted in January 2016 that there would be a rise in prices over the following 12 months.