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February UK retail sales reveal underlying slowdown

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Retail sales volumes in the UK excluding petrol fell one per cent between January and February 2011 with poor trade at department and general merchandise stores driving this decline, according to official data.

The Office for National Statistics (ONS) indicates that the volume of retail sales was up 1.2 per cent year-on-year, but it is apparent that British consumers are increasingly reining in their spending as 2011 draws on.

Non-specialist stores saw a 3.2 decline in the volume of trade month-on-month, while household good sales dipped 2.5 per cent during the same period.

ONS’s data also shows that predominately non-food trading slipped by 1.6 per cent and textile, clothing & footwear retail sales were down 1.3 per cent on January, when sales were boosted by special offers and customer incentives.

Chancellor George Osborne detailed a number of measures in yesterday’s Budget speech that could boost consumer confidence in the months ahead, such as an increase in the personal tax allowance and a freeze on fuel duty increase and 1p reduction in petrol tax, but retailers are facing a difficult task in encouraging shoppers through their doors.

Reflecting on today’s ONS figures, Senior UK Economist at Capital Economics Vicky Redwood said the results highlight the “significant slowdown in consumer spending” during the last few weeks.

“Admittedly, the fall to some extent reflects the fact that sales were temporarily boosted in January by both pent-up demand after the snow and a pre-VAT boost at the start of the month,” she added.

“But note that the level of sales has now fallen below the pre-snow level in November, suggesting an underlying slowdown is at work too – consistent with the cautious noises from many retailers recently.”

Published on Thursday 24 March by Editorial Assistant
Tags: ONS ONS

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