UK retail sales drop 1.5 percent in January 2014

UK retail sales dropped 1.5 percent last month compared to the holiday spending month of December, as English consumers chose to save their pennies in January 2014, according to industry data released today by the Office for National Statistics (ONS). The ONS data reflects a decrease

in British retail sales which was slightly largely than predicted by economists, who forecast a 1 percent drop in retail sales for January. The data also shows the total amount spent on retail sales decreased 1.8 percent in the same period, but the ONS notes that month-on-month growth in December 2013 was particularly strong at 2.5 percent, so a decrease was expected for January 2014.

Retail

sales for January 2014 up 4.3 percent from January 2013

However, retail sales for January 2014 were 4.3 percent higher than the same month last year, which saw heavy snowfall keep a number of shoppers home. With the inclusion of store price inflation growth, which was measured by the price deflator and slowed to 0.2 percent, the lowest inflation reported since September 2009, the total amount spend in January 2014 grew 4.4 percent in comparison to January 2013.

The RBS Economic Insight tweeted that although “UK retail sales fell in January, that's after a super strong December, so real growth is still respectable at 4.3 percent year-on-year”.

Data shows that on a year-on-year basis, there was considerable growth in the non-food sector of retail sales, which was up 8 percent, with other goods stores increasing by 14.8 percent. Retail sales in non-specialized stores or department stores grew 8 percent in January 2014, while clothing and footwear stores witness no change in retail sales compared to January 2013.

The ONS adds that the reported increase for retail sales of non-food was in part consequence of a weak January 2013, when heavy snowfall which fell during the month could have affect retail sales. For every pound spent during the month of January, 42 pence was spent in food stores, 41 pence in non-food stores, 6 pence in non-store retailing and 11 pence at gas stations.

UK retail sales online followed a similar pattern to the retail sales in physical stores. When compared to January 2013, the amount spent online grew 8.9 percent, but dropped 3.3 compared with December 2013. Retail sales for textile, clothing and footwear items purchased online was estimated to be 12.9 percent. The amount spent online accounted for 10.7 percent of all UK retail spending, excluding fuel.

The ONS concluded that it is currently reviewing the seasonal adjustments for the proportion of sales made online, which may have been influenced by extreme weather conditions and flooding affecting some parts of the country. The adjustments will be then implemented in March 2014 for February's data.