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The UK’s retail sector performed less well than expected in January, with sales unexpectedly falling compared to the previous month amid a rise in fuel and food prices.
Seasonally adjusted retail sales excluding vehicle fuel were 0.2 per cent lower than in December, which had already seen the worst monthly slump since 2011.
On an annual basis, retail sales grew just 2.6 per cent, down from expectations of a 3.9 per cent jump, the worst figure in more than a year and lower than the previous month’s annualised growth rate of 4.9 per cent.
Including vehicle fuel sales, retail sales fell 0.3 per cent on a monthly basis, down from expectations of a 1 per cent rise, and were down 1.5 per cent on an annualised basis from expectations of a 3.4 per cent rise.
The Office for National Statistics said that as a result of the low figure in January, the three-month trend had moved downwards for the first time since the end of 2013.
Kate Davies, ONS senior statistician said:
In the three months to January, retail sales saw the first signs of a fall in the underlying trend since December 2013.
We have seen falls in month-on-month seasonally adjusted retail sales, both in conventional stores and online, and the evidence suggests that increased prices in fuel and food are significant factors in this slowdown.
December’s retail sales growth had been the worst monthly decline in spending in five and a half years, with month on month sales 2 per cent lower than November.
The Confederation of British Industry warned last month that UK retailers faced a tough year after it said retail sales in January fell overall among the 52 retailers it surveys, amid a weaker pound that it expected to lead to higher inflation and a squeeze on household incomes.
Figures earlier this week showed the UK’s inflation rate hit its highest level in two and a half years in January at 1.8 per cent as the impact of a weaker pound and rising energy prices were increasingly passed on to consumers.
The pound, which was slightly weaker on the day before the retail sales figures were released, slumped after the figures were released, losing 0.6 per cent to $1.2408.