Retail sales growth slows in January

Underlying growth in retail sales volume slowed in January as sales fell back after a strong December, but remained robust when compared with the long-run average, according to the Office for National Statistics (ONS).

The volume of retail sales in the three months November to January was 0.9 per cent higher than in the previous three months. This follows 1.4 per cent growth in the three months to December and compares with an increase of 1.1 per cent at the same time in 2006.

Three-monthly growth in sales volume was 0.9 per cent for non-food stores and 0.4 per cent for food stores. The lowest three-monthly growth occurred in non-specialised stores where sales fell by 0.3 per cent, the lowest for this sector since July 2005. The highest three-monthly growth was for non-store retailing at 4.7 per cent. This mainly reflects continued strong growth by specialist internet and mail order retailers. Compared with the same period a year ago, total sales volumes in the three months to January 2007 were up 3.5 per cent.

Analysis of monthly figures shows that the total sales volume decreased by 1.8 per cent between December and January, the largest monthly fall since January 2003 when sales fell 2.0 per cent. The biggest contributions to the fall came from clothing stores where sales fell by 4.4 per cent, household goods stores where sales fell by 4.2 per cent and 'other' non-food stores where sales fell by 3.7 per cent. The total volume of sales in January was 3.3 per cent higher than in January 2006.

For the three months to January the unadjusted value of retail sales was 3.9 per cent higher than in the same period a year earlier. The average weekly value of sales in January was £4.4 billion, 2.8 per cent higher than in January 2006. Sales by food stores increased by 3.4 per cent over the year compared with 1.1 per cent growth for non-food stores.

Ian Kernohan, Economist, RLAM, commented: “The retail sales data for January were shockingly weak and together with the latest RICS housing survey, suggest that three rate increases since August are beginning to have an effect on the economy. It now looks like there will be no interest rate rise in March and I continue to expect a cut in rates by the end of the year.”