Published: Fri, February 16, 2018
Business | By Max Garcia

January sees slowest retail sales growth in 6 months

January sees slowest retail sales growth in 6 months

This was offset by a decline in food store spending (-0.9%) as food prices continued to rise.

'Our data showed that the average spend in January was higher than in December, particularly in the first week of the month which saw purchases up 12% compared to the average day past year.

"Get fit and lose weight" New Year's resolutions tipped January's retail sales figures into positive territory after a disappointing December, but weak consumer spending remains a headwind for the United Kingdom economy.

Friday's data comes after December's retail sales posted a steep fall, while surveys of conditions across the manufacturing, construction and services industries in January all also pointed toward a cooling of growth at the start of the year.

According to the ONS, the rise in non-food sale was largely down to sports equipment, games and toys, which rose 10.9 per cent.

In January 2018, the underlying pattern in retail sales, as suggested by the three-month on three-month measure, is one of slow growth with the quantity bought increasing by 0.1%; the lowest growth since April 2017.

When compared with January 2017, the quantity bought in January 2018 increased by 1.6%; a slowdown to year-on-year growth when compared with an increase of 2.4% in January 2017.

On the back of the news, sterling dipped 0.37% to $1.4047 against the dollar.

Retail sales across the United Kingdom significantly undershot expectations in January, underscoring the extent to which shoppers are still feeling squeezed by high inflation and stagnant wage growth ahead of Brexit.

"Retail sales growth was broadly flat at the beginning of the New Year with the longer-term picture showing a continued slowdown in the sector". This means that the real, inflation-adjusted wages are negative with the prices rising faster than wages weighing on consumers willingness to shop.

"The big question now is whether this is the start of a worrying trend for the economy, or whether falling inflation and rising wages will come to the rescue", said Ben Brettell, senior economist at Hargreaves Lansdown.

The Bank of England says wage growth is on an upward trajectory, while inflation may well have peaked.

'Assuming pay growth figures over the next couple of months back up this theory, it still looks like the MPC will have the confidence to raise interest rates to 0.75% in May, ' he added.

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