Retail sales drop sharply
UK consumers cut back on spending
February 20 2003
UK retail sales fell by one per cent in January, more than had been expected by the City.
The figures from the Office for National Statistics follow a 0.9 per cent gain in December, and bring the annual rate of increase down to 4.2 per cent from 6 per cent in December.
In the three months to January, sales were up by 1 per cent on the previous three months and 4.8 per cent higher compared with the same period a year ago. That rate is lower than most of 2001 and 2002.
Barclays Bank retail industry specialists said the the lowest underlying rate of growth in two years had been achieved at the expense of margins, cut by more than expected in order to shift stock. Barclays’ analysis also shows that the underlying growth in the value of retail sales is slowing: in the three months to January 2003 the value of retail sales grew by 3.6 per cent on the same period a year ago.
Barclays retail industry team expects the underlying trend in retail sales growth to continue to weaken for the remainder of this year. Paul Clarke, National Retail Director, Barclays Business Banking said: “Healthy volumes in January helped retailers turn stock into cash, albeit with the help of weaker margins. Consumers are becoming much smarter shoppers. They’re increasingly deferring buying decisions until the sales. The High Street winners will be those retailers using superior supply chains to keep their product lines fresh.”
