Retail sales gain momentum in January after a poor festive showing with help from sales promotions, but the trend remains one of decline.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Retail sales gained momentum in January after a steep fall over the festive period, signalling a resilience in consumer demand despite the double pressure of high inflation and a swift uptick in interest rates, upping borrowing costs, on household budgets.
“Official figures suggest there were bargains to be had in the January sales, with many retailers relying on sales promotions to entice consumer spend to make up for a poor showing in December, which was worse than initial estimates.
“The increase in sales in January were led by a 2% rise in online sales, a 1.7% rise in fuel sales and an 0.6% increase in non-food stores sales volumes. However, other areas of consumer spending remained depressed. Food store sales volumes fell by 0.5% last month, following a fall of 0.7% in December, as customers continued to tighten their belts amid the soaring price of food.
“While sales were up by 0.5% in January, the general trend remains one of decline as retailers continue to be buffeted by lower margins and falling volumes. Sales volumes fell by 0.9% in the three months to January 2023 when compared with the previous three months, and by 5.7% year-compared with the same period a year earlier.
“Retailers are still grappling with its own soaring cost, with high labour costs and soaring energy bills hitting their bottom lines, and some retailers are still reeling from post-Covid supply bottlenecks. They have to decide how much of this to absorb and how much to pass on to shoppers.
“The cost-of-living squeeze on household finances continues to impact the retail sector. Many Britons have been forced to rein in spending on nice-to-have goods and services and reduce their basket sizes to maintain financial buoyancy. With inflationary pressures set to continue this year, Britons will likely continue to reshuffle their spending priorities and allocate more of their budget on everyday essentials.”
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