January snow hits UK retail sales

UK retail sales declined from December to January, surprising economists who had forecast sales to grow at the start of the year.

Figures released today by the Office for National Statistics (ONS) show that the quantity of goods bought in the retail sector dropped by 0.6% from December 2012. Sales volumes also fell by 0.6% from a year ago.

Most downward pressure came from a significant drop in food sales: the quantity bought in the food sector last month was estimated to have fallen by 2.6% year-on-year, to the lowest level since April 2004.

Commenting on the figures, John Longworth, director general of the British Chambers of Commerce, said that although they only represent a single month, the drop in retail sales is a “serious warning” to the government, indicating that more needs to be done to get the economy growing again.

There were contrasting fortunes for smaller and larger retail outlets last month, with large stores seeing sales increase. There was an overall fall in the quantity bought in small stores and the contrast was particularly marked in the food sector.

Smaller retailers told the statistics agency that the heavy snow in the second half of January had affected their sales, while large store retailers reported that some of the increase they had seen in the quantity bought by consumers had come from a rise in online shopping.

Overall, online sales represented 10.1% of all retail spending (excluding automotive fuel) last month and the average weekly spend online was estimated at GBP546.5m, an increase of 8.7% compared with January 2012.

In the food sector the proportion of sales made online rose by 27.1% year-on-year and equated to 3.7% of all food sector sales, the highest on record.

The total amount spent in the retail sector in January 2013 was GBP24bn, unchanged from January 2012, with an average weekly spend of GBP6.1bn. Over the course of the year, the prices of goods sold in the retail sector increased by 0.8%.