Retail sales slim on New Year diets

london — British shoppers’ New Year resolutions to get fit proved less healthy for retailers last month, as sales rose much less than expected and a longerterm backdrop of rising prices and lacklustre wages also weighed on growth.

Even by the standards of a normal January, demand for gym wear and sporting goods was unusually high — but this was not enough to offset a chunky fall in the volume of food purchases, the Office for National Statistics said on Friday.

Overall, retail sales volumes rose 0.1 per cent on the month, well below forecasts in a Reuters poll for a monthly rise of 0.5 per cent, after dropping 1.4 per cent in December. In year-on-year terms, sales grew by 1.6 per cent — the fastest since August, but still right at the bottom end of economists’ range of forecasts.

“Analysts will no doubt be digesting these figures to determine if this was a reflection of households setting about 2018 with the aim of shedding some pounds, or... merely symptomatic of the extent of the broader household cash squeeze underway,” Investec economist Victoria Clarke said.

Britain’s economy underperformed its rivals last year as higher inflation — caused by the fall in the pound since June 2016’s Brexit vote — hurt spending power, though forecasts for a severe downturn proved too pessimistic.

The Bank of England expects the consumer squeeze to ease in 2018 as inflation cools from near six-year highs and wage growth ticks higher, although surveys of British households suggest sentiment remains subdued.

Andrew Sentance, a senior economic adviser to accountants PwC and former BoE rate-setter, said it would take until the second half of the year at the earliest until consumers felt the benefit of lower inflation. —