UK retail sales fell in January in a reversal of fortunes for the sector
UK retail sales fell in January as shoppers curbed spending on non-food items.
On a like-for-like basis, retail sales fell 0.6 per cent in January as compared to the same month a year before, reversing a sales rise of one per cent in December.
Total sales rose just 0.1 per cent, against a 3.3 per cent increase in January last year, according to figures from the British Retail Consortium (BRC) and KPMG.
Read more: Shop prices drop in January as retailers clear Christmas stock
Helen Dickinson, chief executive of the BRC said that over the last three months slowing sales in non-food retail had resulted in the slowest growth for the festive period since 2009. Over the three months to January, non-food sales grew 0.2 per cent on a like-for-like basis. Food sales grew by 0.6 per cent.
"These figures suggest that 'caution' was top of new year shopping lists and the uptick in credit card lending at the end of last year may be short lived," she said. "With the signs pointing to upward pressures on shop prices given rising import costs, all eyes will be on the impact of inflation on consumer spending."
Read more: UK retailers slash 84,000 jobs amid storm of rising costs and price wars
Non-food sales reached record highs online, however, posting a growth of eight per cent. In the three months to January, online sales contributed 2.9 percentage points to non-food sales growth, the highest ever recorded by the BRC.
The difficulties facing the retail sector have already started to impact jobs. Recent employment figures from the BRC showed that 84,000 jobs were lost from the retail industry in the final quarter of last year. Cost pressures were cited as the main reason for the shrinkage in the retail job market.
Howard Archer, chief UK economist at IHS Global Insight, said: "Worryingly for retailers – and for overall growth prospects – it looks inevitable that the fundamentals for consumers will weaken markedly as 2017 progresses with purchasing power being increasingly squeezed. We also suspect that the labour market will soften."