Upturn in high street sales not indicative of recovery
High street sales figures yesterday revealed a better-than-expected rise of 2.1% last month, but the result came after a sharp revision down for January.
The Office for National Statistics (ONS) showed figures for January were much worse than originally thought, with sales volumes down by 3% against the initial estimation of a 1.8% decline.
While the rise in February sales volumes beat market forecasts, the year-on-year increase of 3.5% was far lower than experts had predicted. The January revision meant the retail sector suffered its worst sales performance in a year and a half during the month, but sales bounced back in February as the weather improved.
ONS figures showed by value, sales rose by the highest amount since the summer of 2008, up 1.9% month-on-month and by 4.9% on a year earlier.
Sales growth in non-food stores far outstripped performance in the food sector, up 8.4% by volume on a year ago against 0.5% in food.
The results reinforce news from supermarket giant Sainsbury's on Wednesday, which said non-food sales were growing at three times the rate of food.
Economists said the February ONS figures were not as good they appeared after the steep fall in January. Howard Archer, chief economist at IHS Global Insight, said: “We continue to suspect that the upside for consumer spending — and hence overall economic growth — will be limited in 2010 as households still face very challenging conditions.”
The comments echo a cautious outlook among retailers, with Next yesterday becoming the latest to express concern over spending in 2010 after CBI retail sales figures earlier this week suggested growth had slowed in March.