Economy: January figures show surprise increase in UK retail sales

RETAILERS enjoyed a surprise rise in trade last month as the January sales helped drag shop price inflation to its lowest level for more than two years, official figures revealed today.

Sales volumes rose 0.9% between December and January, according to the Office for National Statistics (ONS), compared with a consensus expectation in the City of a 0.4% fall.

The figures suggested that January’s shop prices were 2.2% higher than a year ago, the smallest rise since November 2009, as shoppers benefited from falling inflationary pressures and retailers putting on a blizzard of discounts to woo cash-strapped consumers.

Every sector apart from clothes stores reported a slower rate of price increases than the previous month.

But with internet outlets and supermarkets among the biggest drivers of the increase in volumes, fears persist for the future of the high street.

The figures produced by the ONS are seasonally adjusted because January is normally a weaker shopping period than December, but they show that sales volumes in January were 2% higher than a year ago.

Household goods stores saw their first sales growth for nearly a year, up 4.8% month-on-month, as furniture stores put in a particularly strong performance with high levels of discounting.

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The ONS also said there was anecdotal evidence that sportswear retailers had enjoyed a strong month.

January’s strong growth goes against the much more pessimistic picture painted by other anecdotal evidence and retail surveys.

Samuel Tombs, an economist at Capital Economics, said even if the figures are taken at face value, there were reasons to think that the strong growth could not be maintained.

He said: “With unemployment on an upward trend, credit conditions tightening and real incomes still being squeezed, the underlying conditions for consumers are still tough.”