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UK: Shock as retail sales fall 0.6%

PUBLISHED: 10:22 15 February 2013 | UPDATED: 10:22 15 February 2013

There's gloom on the high street as shock figures show a decline in sales

There's gloom on the high street as shock figures show a decline in sales

There was further gloom on the UK high street today as figures revealed an unexpected fall in sales last month after retailers suffered a snow-hit start to the year.

Retail sales volumes fell 0.6% between December and January, in stark contrast to predictions that sales would rebound, the Office for National Statistics (ONS) said.

The ONS said the icy conditions hit many smaller food shops, with some forced to close as snow blanketed parts of Britain, pushing food sales volumes down 1.6%.

The figures will reignite fears that the UK economy is on course for a triple-dip recession after the first estimate of gross domestic product (GDP) in the final three months of last year showed the economy contracted.

The figures show the biggest fall in month-on-month food sales since May 2011.

A 2.6% plunge in food sales year-on-year was driven by a 14.9% fall among small shops, according to the ONS.

But the increase in online shopping is thought to have helped the large supermarket chains, which saw a record 0.3% year-on-year increase in sales last month.

The snow is also thought to have hit fuel sales, which were down 2% month-on-month, meaning retail sales volumes excluding fuel fell 0.5% between December and January.

But department stores continued their recent strong showing, with sales volumes up 1.6% on the previous month.

Today’s figures were much worse than expected, while there was also further disappointment over the crucial December trading period after a downward-revised fall of 0.3% from 0.1% previously.

Economists had expected the official figures to show a 0.5% month-on-month rise in sales volumes in January after the closely-watched British Retail Consortium’s figures for the first two weeks of January showed like-for-like sales up 3%.

Samuel Tombs, UK economist at Capital Economics, said: “Admittedly, the weakness of the official figures stands in contrast to the relatively upbeat tone of the retail surveys, suggesting that the former should not necessarily be treated as gospel.”

He said, given that the snow was largely to blame for the fall in food store sales, volumes were likely to recover in February.

But he added: “Nonetheless, 2013 still looks set to be another tough year for retailers, given the likelihood of a further significant squeeze on real pay and a weaker jobs market.”

There have been further signs of the fragile position for retailers after a spate of high-profile retail collapses this year, with fashion chain Republic becoming the latest casualty this week.

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