January retail sales data disappoint

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Spending on Britain’s high streets dropped sharply and unexpectedly in January as snow kept people indoors, according to official figures.

Retail sales data show people bought 0.6 per cent fewer goods in January than in December, after stripping out inflation and making seasonal adjustments. Economists were expecting sales to increase about 0.5 per cent after several industry surveys suggested retailers had a decent month.

Sales volumes were also 0.6 per cent lower than the same month a year earlier, the first time since August 2011 there has been no annual sales growth.

Samuel Tombs, an economist at Capital Economics, said the data “bring the recent run of better economic news to an abrupt end”, but he added: “The weakness of the official figures stands in contrast to the relatively upbeat tone of the retail surveys, suggesting that the former should not necessarily be treated as gospel.”

Sales in food shops and petrol stations fell the most, down 1.6 per cent and 2 per cent respectively between December and January. The Office for National Statistics said small shops with fewer than 10 employees suffered disproportionately.

“This was particularly marked in the food sector with feedback from small retailers suggesting that the heavy snow fall in the latter half of January affected sales,” the ONS said. “In contrast, feedback from large store retailers suggested that some of the increase in the quantity bought came from a rise in online shopping.”

In the food sector, 3.7 per cent of all sales were online, the highest proportion on record and a near 30 per cent increase from a year ago.

Sales in non-food shops rose 0.6 per cent, with “non-specialised stores” such as department stores enjoying a 1.6 per cent lift from a month earlier.

Howard Archer, an economist at IHS Global Insight, said the data were “a significant dent to growth hopes for the first quarter of 2013, and much will depend on how well retail sales rebound in February”.

He added: “Some very decent weekly sales figures from John Lewis for the last two weeks at least gives some hope that retail sales will recoup at least some of January’s losses.”

Earlier this month, data compiled by the British Retail Consortium and KPMG showed like-for-like sales rose 1.9 per cent in January compared with a year earlier. Total sales increased 3 per cent, the highest in four months.

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