Respite for retailers as sales edge upwards after six-month lull

SHOPKEEPERS won some respite from the crisis hitting the high street this month as sales edged back to more normal levels after six months of disappointing footfall.

Retailers said sales were slightly better than usual for February and they anticipate a further recovery in March, according to a CBI survey. Record employment and rising wages have kept consumer confidence high, economists believe.

Online sales surged particularly strongly, and shops also said the intense price pressure of the past 18 months was easing.

The selling price index rose at its slowest pace since early 2017.

“Households’ real incomes currently are being boosted by a decade-high rate of nominal wage growth, low inflation and robust employment gains,” said Samuel Tombs at Pantheon Macroeconomics.

“Consumers still look set to ensure that GDP rises, albeit modestly, in the first quarter, despite a further sharp fall in business investment.”

However, the embattled sector is not out of trouble yet and appears to be battening down the hatches. Businesses gave the gloomiest outlook for employment in more than a year and also warned they are slashing investment plans.

“A major concern for retailers will be that cautious consumers limit their spending in the near term at least due to the heightened uncertainties over Brexit,” said Howard Archer, chief economic adviser to the EY Item Club. “Despite the recent improvement, consumer purchasing power is still relatively limited compared to past norms while confidence is fragile.

“Furthermore, with the savings ratio being very low, consumers may at the very least be keen to avoid further dissaving – especially given current major uncertainties.”

Retailers closed more than 18,000 stores last year as high streets, retail centres and shopping centres struggled to cover their costs at a time of intense online competition, rising wage bills and tough business rates payments.

Paperchase is in talks to cut its rent bill, Office this month reported an almost 40pc fall in profits and Debenhams received a £40m lifeline from lenders in a sign that February was not entirely plain sailing for high street stalwarts.