By Ian McConnell

UK retail sales in January were up slightly on the same month of last year, a key survey shows, but the effects of a decade of austerity on consumers has been underlined.

The British Retail Consortium highlights the influence of austerity in its latest monthly survey, published today. The survey shows the value of UK retail sales in January was up by 0.4 per cent on the same month of last year. This followed a weak festive period for retailers.

The effect of discounting on retailers’ profit margins was also highlighted by the BRC, which also flagged the impact of a heightened focus on sustainability on consumer behaviour.

Helen Dickinson, chief executive of the BRC, said: “January saw a return to growth. However, recent political uncertainty and a decade of austerity appear to have ingrained a more thrifty approach to shopping among consumers. Furthermore, as sustainability continues to rise up the agenda, many customers are switching to more environmentally friendly products or simply choosing to buy less.”

She added: “Across the UK, retailers are facing tighter margins as a result of weak consumer demand and increasing costs.”

Paul Martin, UK head of retail at accountancy firm and BRC survey sponsor KPMG, flagged continuing uncertainties around Brexit.

He said: “With Brexit ‘technically’ behind us, retailers will be hoping that consumers feel confident enough to re-engage. But much remains unknown as we work towards defining our future relationship with the EU. Retailers are walking a tightrope between navigating any impact on their industry alongside ongoing changes in consumer behaviour.”

Mr Martin observed grocery sales, while still growing, were “muted”.

He said: “Consumer confidence has started to return post-General Election, but we have not experienced any major leaps for the sector yet. We have to remember, this semi-positive performance will also be the result of aggressive discounts and consumers’ preoccupation with bagging a bargain. That’s not always good news when looking at bottom lines.”