High street shop sales bounce back


The high street enjoyed a bounceback in sales last month after retailers such as HMV struggled with Arctic conditions over the festive season

The high street enjoyed a bounceback in sales last month, official figures have revealed, but revised estimates show snow-hit December was even worse than originally feared.

Retail sales volumes declined 1.4% month-on-month in December, downgraded from a 0.8% drop, which was already the worst performance on record for the month, the Office for National Statistics (ONS) said.

But sales rebounded in January, growing by 1.9%, as shoppers returned to the high street after being trapped at home by the severe weather and to beat the VAT hike from 17.5% to 20%.

UK retailers had a torrid festive season as Arctic conditions gripped the country, with big players such as Next and HMV reporting a slump in sales.

The ONS said the sales volumes in December were revised so severely because a large number of late responses were received from retailers. The revised figures still showed food stores were the biggest losers in December, declining by 1.9% month-on-month, downgraded from a 0.9% drop in the first estimate.

As well as the heavy snowfall and icy conditions, high prices were blamed for weak sales volumes over the festive period. The ONS said price growth moderated last month, increasing by 2.7%, as retailers rolled out their January sales.

Department stores were the biggest winners last month, with volume growth of 5.7%, but the ONS said anecdotal evidence suggests the sales volumes peaked in the first week ahead of the VAT hike on January 4.

Vicky Redwood, senior UK economist at Capital Economics, said the combined picture of December and January showed “positive, but unspectacular, underlying growth”.

She said: “What’s more, other evidence suggests that after a strong start to January, spending growth has slowed to pretty sluggish rates and has yet to recover.

“Accordingly, we wouldn’t take January’s rise in sales as evidence that the consumer recovery is firmly back on track. Indeed, with real household incomes set to fall significantly this year, we find it hard to see consumer spending doing at all well.”

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