Retail sales bounce back in Great Britain as Omicron fears ease

January increase of 1.9% comes after shoppers turned to furniture and DIY tools, says ONS

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Last modified on Fri 18 Feb 2022 04.44 EST

Retail sales rebounded in January as shoppers returned to the high street after the disruption caused by the Omicron variant eased.

Official figures showed that sales increased by 1.9% in Great Britain last month, with much of the increase to sales credited to an increase in the sales of furniture and DIY tools as households refreshed their homes.

Food sales fell below their pre-pandemic level for the first time, as more people returned to eating out, and online sales and the proportion of themdropped to its lowest level since March 2020 because people ventured out more.

The sales uplift was stronger than City economists had forecast, and compared with a 4% fall in the run-up to Christmas, after the Office for National Statistics downgraded its previous estimate of a 3.7% drop in sales.

Analysts warned, however, that sales were likely to be hit over the coming months and send more shops closer to the edge of bankruptcy, as the cost of living crisis intensifies and the squeeze on wage packets weighs on consumer confidence.

Inflation increased to 5.5% in January, driven by a rise in the cost of energy and clothing and footwear. The energy regulator Ofgem has said the cap on household energy will increase in April, sending average bills up by almost £700 a year.

Paul Martin, the UK head of retail at KPMG, said: “The retail sector started the year in relatively good health and not facing further Covid restrictions on the ability to trade.”

He added, though: “Retailers will be acutely aware that the cost of living squeeze could see consumers scrutinising their spending more over the coming weeks and months, impacting trade.

“This picture will be compounded if those who managed to save during the pandemic decide the time isn’t right to spend what they’ve accrued.”

Petrol and diesel sales also rebounded in January after workers began to return to the office and consumers made more trips to out-of-town shopping centres.

Samuel Tombs, the chief UK economist at the consultancy Pantheon Macroeconomics, said that while official figures showed sales volumes above pre-pandemic levels, they were still 0.5% below their average level in the final quarter of 2021, “and the near-term outlook remains overcast”.

He said: “Households’ real disposable income looks set to fall by nearly 2% this year, the most since 1977. And while high-income households have amassed considerable savings, we judge they are more likely to splurge them on big-ticket items, such as cars or foreign holidays, than on retail store purchases.

“In addition, the below-average level of consumers’ confidence suggests that households will be reluctant to borrow more to smooth out the real income shock, unlike in 2017, when sentiment was higher.”

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