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Sharp slowdown of yearly growth for UK retail sales

YEAR-on-year growth in UK retail sales volumes slowed sharply in early January, a survey has revealed, highlighting the pressures on consumers.

The survey, conducted by the Confederation of British Industry between January 2 and 15 and published yesterday, showed 33% of retailers were enjoying higher sales volumes than in the same period of last year, with 19% experiencing a decline.

The balance of 14% experiencing a year-on-year rise in sales in early January was well adrift of a corresponding net 34% of retailers reporting such an increase in the CBI's December distributive trades survey.

And Martin Beck, UK economist at consultancy Capital Economics, believed disruption caused by heavy snow in early January last year would have flattered the latest CBI sales figures.

He said: "The timing of January's survey will have benefited from a favourable comparison with last year."

The CBI survey showed clothing retailers suffered a year-on-year tumble in sales volumes in the early part of this month. In contrast, grocers and furniture and carpet retailers enjoyed strong year-on-year growth in sales.

Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The CBI survey suggests consumers reined in their spending to some extent in the early weeks of January, after finally splashing out in December in the run-up to Christmas and at the start of the clearance sales."

He saw a pattern in recent months of consumers tightening the purse strings, after periods of spending more freely on the high street.

Mr Archer said: "While overall sales in January were hindered by winter clothing sales being limited by the mild weather, the CBI survey does support the view that many consumers are being cautious in their expenditure and are keen to contain their spending after they have splashed out for any reason. This is clearly a consequence of the extended squeeze on consumers' purchasing power that has come from inflation running above earnings growth for an extended period."

Citing month-on-month movements in data from the Office for National Statistics, Mr Archer said: "It is notable retail sales fell markedly in October and were muted in November after consumers had spent at a rapid clip over the summer."

A balance of 15% of retailers surveyed by the CBI forecast year-on-year growth in sales volumes next month.

Barry Williams, chairman of the CBI distributive trades survey panel, said: "While retailers predict some modest growth ahead, the prospect of continually slow pay growth is likely to mean cautious consumers for some time to come."

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