Monday, 16 July, 2018

UK Retail Sales Post Weak Growth in January

UK retail sales unexpectedly eased at the start of the year UK retail sales unexpectedly eased at the start of the year
Nellie Chapman | 18 February, 2018, 06:22

Wages have failed to keep pace with inflation since last spring, denting demand, though economists had expected 0.5% growth in volumes because December had proved so weak.

Retail sales data in the United Kingdom has disappointed experts' forecast for several months now, with December delivering declining sales growth of 1.5%.

The statistics agency pinned the blame on widespread price rises, with sliding food sales being countered by double-digit growth of games, toys and sports equipment.

Keith Richardson, managing director retail sector at Lloyds Bank Commercial Banking, adds:"Even January's cold snap wasn't enough to tempt shoppers to splash out revamping their winter wardrobes as retailers saw their year get off to a frosty start".

British retailers barely scraped a rise in sales at the start of the year as inflation-induced price hikes caused growth to unexpectedly ease.

United Kingdom retail sales increased by 0.1% in January, their lowest growth rate since April 2017, according to the Office of National Statistics (ONS).

United Kingdom retail sales grew only modestly in January, having posted a steep drop the previous month, new figures showed Friday, signaling weak consumer spending continued to weigh on the largely domestic-driven economy.

"Sporting equipment sales have grown more than usual in January following an increased uptake for gym wear.".

"Meanwhile, we expect earnings growth to trend up gradually as a effect of recruitment difficulties in some sectors and higher inflation fuelling some increased pay awards". "This can partly be attributed to a background of generally rising prices", said ONS senior statistician Rhian Murphy.

Excluding auto fuel, retail sales growth improved to 1.5 percent from 1.3 percent in the previous month.

Looking at the broader picture of the United Kingdom economy, the outlook for the interest rates remains slightly more optimistic with the Bank of England providing an exceptionally hawkish outlook for interest rate hikes in its February Inflation report.

"This means we could see an end to falling real wages in the coming months, which would provide a welcome fillip to cash-strapped households", he continued. The Bank of England seems to have factored in the current trend of retail sales weighing on the economic activity as it kept the growth outlook broadly unchanged.