Belfast Telegraph

Thursday 31 July 2014

Snowfall blamed for drop in sales

Economists are expecting retail figures to show sales volumes increased in January despite the winter weather

January's heavy snow saw retailers suffer a shock fall in sales last month after many small grocers were forced to shut up shop amid the freezing weather.

The Office for National Statistics (ONS) said retail sales volumes fell 0.6% between December and January, driven by the biggest month-on-month fall in food volumes since May 2011.

Small shops, such as convenience stores and high street butchers and bakers, were hit the hardest with sales falling 14.9% year-on-year, but online shopping services are thought to have helped the large supermarket chains record a rise of 0.3%.

The figures dashed City expectations for a 0.5% rise in volumes after the closely-watched British Retail Consortium's figures for the first two weeks of January showed like-for-like sales up 3%. And there was further further disappointment over the crucial December trading period after the ONS revealed a downward-revised fall of 0.3% from 0.1% previously.

The gloomy sales report 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 by a worse-than-expected 0.3%.

Further signs of the struggle on the high street came this week after fashion chain Republic collapsed into administration, joining this year's other high profile retail casualties HMV, Jessops and Blockbuster.

But Samuel Tombs, UK economist at Capital Economics, gave hope of a bounce back in the retail sector as he said sales were likely to recover in February, given that much of the fall was driven by the snow and its impact on food stores.

The ONS said sales also fell against a year earlier in January by 0.6%, bringing to a halt the year-on-year growth seen in the sector since August 2011. Food sales fell 1.6% last month and were 2.6% lower year-on-year, according to the ONS.

The snow is also thought to have hit fuel sales, which were down 2% month-on-month, with retail sales volumes excluding fuel falling 0.5% between December and January. But department stores continued their recent strong showing, with sales volumes up 1.6% on the previous month.

Howard Archer, chief UK and European economist at IHS Global, said Friday's figures showed many Britons reined in their spending at the beginning of the year. He added: "Even allowing for a substantial hit to retail sales from the snow, the further fall in January fuels concerns that consumers may be becoming more careful in their spending as consumer price inflation moves back up and squeezes purchasing power."

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