UK Retail Sales Decline at Fastest Pace in Almost 2 Years
UK retail sales tumbled in January, as demand at food and clothing stores declined after the holiday season.
Retail receipts declined 1.5 percent in January, the Office for National Statistics reported today. The decline, which was the steepest in nearly two years, follows a gain of 2.5 percent in December. Sales excluding fuel also declined 1.5 percent.
Weak demand at supermarkets and clothing stores was the main factor behind last month’s bigger than forecast drop. According to the ONS, this is partly due to the previous month’s particularly strong growth pace. Compared to year-ago levels, however, retail sales were strong, a sign UK recovery remains on solid footing. Retail revenues were up 4.3 percent over the previous 12 months. Excluding fuel, revenues rose 4.8 percent annually.
Annual gains were led by non-food stores, where receipts rose 8 percent. Stores selling household goods saw their revenues rise 9.8 percent over the previous 12 months, the strongest year-on-year increase since July 2007. The quantity bought at other goods stores increased 14.8 percent, official data showed.
Although not expected to slow down UK recovery, weak sales in January presents a problem for retailers looking to clear winter inventories. Combined with an unexpected rise in unemployment between October and December, declining retail trade reinforces the Bank of England’s decision to maintain accommodative monetary policy.
Earlier this month the BOE raised its annual outlook on the UK economy to 3.4 percent. The combination of reduced uncertainty, easier credit conditions and loose monetary policy is expected to keep the economy firing in 2014. The unemployment rate, which has been used as a guidepost for monetary policy, is expected to reach 7 percent by the spring.
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