There’s a big difference between tempting shoppers with bargains and persuading them to keep buying

Philipp Gutzwiller,

Head of retail at Lloyds Bank Commercial Banking

london — British retail sales rebounded strongly in January as steep clothing discounts attracted wary shoppers, bucking a slowdown in consumer spending ahead of Brexit.

Retail sales volumes jumped by a monthly 1 per cent after their biggest fall in December in a year-and-a-half, the Office for National Statistics (ONS) said, far above the median forecast in a Reuters poll of economists for a 0.2 per cent rise.

Compared with a year ago, retail sales were 4.2 per cent higher in January, the biggest annual rise since December 2016 and again outstripping almost all forecasts in the poll. Sterling edged a little higher against the dollar on the back of the figures.

Philipp Gutzwiller, head of retail at Lloyds Bank Commercial Banking, said Friday’s data were “undoubtedly a positive” although the big picture remained one of cautious spending.

“There’s a big difference between tempting shoppers with bargains and persuading them to keep buying once January’s discounts and New Year’s resolution purchases are over though.”

The ONS said clothing sales grew strongly thanks to the biggest cuts in annual terms since August 2016. Food sales also grew after a slight dip over the Christmas period.

Looking at the three months to January compared with a year ago, which smooths out some monthly volatility, retail sales growth picked up to a six-month high of 3.5 per cent from 2.9 per cent in December. Clothing sales on this measure grew by the largest volume since September 2017.

Britain’s economy slowed sharply in the last few months of 2018 but Friday’s data suggested that consumer spending remains resilient. —