High street sees 'most disappointing' quarter since 2009 as UK inflation worries mount

"These figures suggest that 'caution' was top of new year shopping lists," the British Retail Consortium says

Ben Chapman
Tuesday 07 February 2017 11:21
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Research found that sales for last October, November and December were the worst since 2009
Research found that sales for last October, November and December were the worst since 2009

The high street saw its “most disappointing” quarter since the 2009 financial crisis in the final three months of 2016, and January sales have also lagged behind expectations, new research shows.

The British Retail Consortium found that UK shoppers reined in spending in January – a sign that concerns about rising prices may be beginning to hit confidence.

Like-for-like sales fell by 0.6 per cent in January from the same month a year ago, a sharp reversal of December's 1.0 per cent increase and well below the 0.8 per cent rise predicted by economists, the BRC said. By contrast, sales increased 2.6 per cent during January 2016.

It was the first time that like-for-like sales have fallen since August last year, shortly after the EU referendum.

“These figures suggest that 'caution’ was top of new year shopping lists and the uptick in credit card lending at the end of last year may be short-lived,” BRC chief executive Helen Dickinson said.

“With the signs pointing to upward pressures on shop prices given rising import costs, all eyes will be on the impact of inflation on consumer spending.”

Rachel Lund, head of retail insights and analytics at the BRC, told the BBC that combined sales for October, November and December were the most disappointing since 2009.

Ms Lund expects prices to begin rising in February, but “it's going to be difficult” for retailers to pass on the effect of the weak pound, due to strong competition, she said.

The pound has fallen around 17 per cent against the dollar since June 2016 and is also down against the euro.

A separate survey from Barclaycard published on Tuesday also pointed to early signs that inflation is beginning to bite.

Barclaycard retail spending increased 4.4 per cent in the year to the end of January, up from 4.0 per cent a month earlier. However, this was due to a 15 per cent surge in petrol spending, with spending on other non-food goods falling.

Official data released last month showed retail sales volumes falling the most in more than four years in December.

Last week the Bank of England reported the first slowing in the pace of consumer borrowing in five months. The Bank said it expects inflation to rise to 2.75 per cent by mid-2018, cancelling out expected wage increases.

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