UK retail sales recover more than expected from Omicron knock

0
254

Shoppers queue to enter a shoe shop in Manchester, Britain. Reuters

British retail sales grew faster than expected in January, recovering about half the losses suffered when a wave of coronavirus cases caused many shoppers to stay at home during December.

Retail sales volumes rose by 1.9 per cent in January after a 4.0 per cent decline in December, the largest rise since lockdown rules for non-essential stores in England were relaxed last April.

The monthly increase was larger than the average 1.0 per cent gain forecast in a Reuters poll, although December’s drop in sales was slightly bigger than first estimated.

“The solid rise in retail sales volumes in January adds to the signs that the Omicron-induced hit to activity was smaller and shorter-lived than previously thought. Even so, the cost of living crisis means the outlook for retailers is anything but bright,” said Adam Hoyes, economist at Capital Economics.

Retailers face rapidly surging consumer price inflation, which hit its highest in nearly 30 years in January at 5.5 per cent, and is forecast by the Bank of England (BoE) to peak above 7 per cent in April.

A separate measure of inflation used to calculate January’s retail sales data rose to 6.7 per cent, the highest on record.

Fast-rising prices for energy and food leave consumers with less spare cash to spend on non-essentials, and 2022 looks set to bring the biggest squeeze on households disposable income in 30 years.

January sales volumes were 9.1 per cent higher than a year earlier, when non-essential shops were shut due to lockdown restrictions, and 3.6 per cent above pre-pandemic levels.

Britain’s retail sector as a whole was relatively resilient through the COVID-19 pandemic, with sales as a whole already back above January 2020 levels in July 2020, thanks to a big shift to online shopping.

However some retailers, especially clothes stores with little online presence, found it much harder to recover from repeated lockdowns, the last of which ended in England in April 2021.

Some pandemic trends have been slowly reversing. The percentage of sales made online fell to 25.3% in January, its lowest since March 2020 although still well above the 19.8 per cent seen in February 2020 before the pandemic.

Food sales also fell below pre-pandemic levels for the first time.

“More people returned to eating out and there was also anecdotal evidence suggesting higher demand for takeaways and meal-subscription kits,” ONS statistician Darren Morgan said. FTSE 100 rises but heads for worst week in three months

Meanwhile the UK shares rose on Friday after a potential Russia-US meeting spurred hopes of a diplomatic solution to the standoff over Ukraine and strong retail sales data for January offered some respite after December’s dismal performance.

The blue-chip FTSE 100 gained 0.3 per cent at 0805 GMT but was still headed for its worst week in nearly three months after 30-year-high inflation numbers earlier in the week and tensions in Ukraine hit sentiment.

British retail sales grew faster than expected in January, recovering about half the losses suffered in December when a wave of Omicron cases caused many shoppers to stay at home, the Office for National Statistics said.

Taxpayer-backed bank NatWest Group fell 1.2 per cent after warning that rising prices would make it harder to cut overheads, lowering its annual cost-cutting target for the next two years.

Warehousing specialist Segro gained 6.7 per cent after saying it expects highest rental growth in its urban markets, largely on strong demand from e-commerce tenants.

Centrica’s British Gas said it will raise its standard variable tariff from April 1 in line with energy market regulator Ofgem’s price cap increase.

Earlier this month, Ofgem said it would raise its cap on the most widely used tariffs, which covers around 22 million households, by 54 per cent from April due to the increase in global wholesale gas prices.

British Gas said it will be contacting customers to explain how their bill prices will change.

EDF Energy, owned by France’s EDF, has also said it is increasing prices for its standard variable tariff customers by 54 per cent from April 1.

Soaring wholesale prices over the past year have forced about 30 British energy suppliers to exit the market, with 26 going bankrupt since August 2021. Many of the big utilities have taken on the customers from those failed companies.

On Wednesday, Ofgem announced two short-term measures to help to stabilise the UK energy market to help protect consumers who face a further jump in energy prices from April. British interior minister Priti Patel said she had closed a visa route available to those who had invested at least 2 million pounds ($2.72 million) in the country as part of a crackdown on fraud and illicit finance.

LEAVE A REPLY

Please enter your comment!
Please enter your name here