RETAILERS have suffered the weakest post-Christmas sales growth in four years as household spending remained under pressure, a survey has found.
The volume of sales in the UK grew at a slower pace than anticipated for the third consecutive month in the year to January, according to the latest monthly CBI Distributive Trades Survey.
The survey of 107 firms found that sales for the time of year were the weakest against seasonal norms in more than four years while orders placed on suppliers also fell against expectations of growth.
Overall, 33 per cent of retailers said sales volumes were up in January on a year ago and 21 per cent said they were down, giving a balance of 12 per cent that undershot the expected 17 per cent.
But just 9 per cent of retailers reported their volume of sales for the time of year were good while 25 per cent said they were poor, giving a balance of minus 17 per cent – the lowest since July 2013.
Looking ahead, retailers said they expected similar growth in sales and for orders with suppliers to be flat.
Robust growth in sales for grocers and non-store retailers offset a decline in furniture and carpets and specialist food and drink.
But online sales rose 55 per cent, the fastest rate since this time last year and beating expectations of a marked slowdown in growth, with a similar rise expected next month.
Anna Leach, CBI head of economic intelligence, said: “Retailers have seen fairly modest sales growth this month overall, but it is online retailers who have set the pace during the January sales.
“Household spending will remain under pressure this year from higher inflation and low wage growth, which will continue to weigh on sales growth in the retail sector.”
Howard Archer, chief economic advisor to the EY Item Club, said: “The January distributive trades survey pointed to weak retail sales over the final week of December and the first two weeks of January. This indicates that squeezed consumers remained cautious in their retail purchases.
“The persistent squeeze on consumers coming from higher inflation and weak earnings growth was highlighted by the latest ONS data showing that real regular earnings were down 0.5 per cent year-on-year in the three months to November, which was a ninth successive decline. Real total earnings were down 0.2 per cent year-on-year in the three months to November, which was the eighth successive decline.
“Meanwhile, consumer confidence fell to a four-year low in December with consumers concerned not only about the squeeze on their purchasing power but also the economic situation and outlook.
“Consumers were also seemingly unsettled by the Bank of England interest rate hike in November.
“The squeeze on consumers remains appreciable at the start of 2018, but it should progressively ease during the year due to inflation falling back significantly and pay gradually picking up.
“The main support for consumer spending has come from high employment.
“However, employment growth looks likely to be softer in 2018 than it was in 2017, while consumer confidence may well remain fragile amid significant economic, political and Brexit uncertainties.”
The CBI’s survey covered retail sales dating from December 27 to January 12.
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