Tough trading conditions for Britain’s hard-pressed retail sector eased slightly in February, according to official figures showing the first increase in sales in three months.
The Office for National Statistics said retail sales volumes were up by 0.8% last month but that the increase was not enough to make up for the weakness of spending in December and January – two crucial months for the sector.
Following gloomy news from retailers including Carpetright, Moss Bros, Kingfisher, Mothercare and New Look, the ONS reported that retail sales in the three months to February – a better guide to the underlying trend than one month’s figures – were down by 0.4% on the previous quarter.
Rhian Murphy, the ONS senior statistician, said: “Retail sales did grow in February, with increases seen in food, non-store and fuel, but this followed two months of decline in these sectors.
“However, the underlying three-month picture is one of falling sales, mainly due to strong declines across all main sectors in December.”
The monthly 0.8% increase in retail sales – seasonally adjusted to take account of big monthly swings in spending patterns before and after Christmas – was double the rise expected by the financial markets but the figures only covered spending up to 24 February – before the UK was blanketed in snow by the “Beast from the East”.
Ruth Gregory, the UK analyst at Capital Economics, said it would now take a 2% increase in March for retail sales in the first quarter of 2018 to match the 0.5% rise in the final three months of 2017. “Overall, then, the retail sector looks set to act as a small drag on overall GDP growth in the first quarter,” she said.
Retailers are hoping that the fall in inflation and the pick-up in earnings growth reported by the ONS this week will lead to rising real incomes and increased spending by consumers during 2018. The ONS said it was still finding price increases across all parts of retailing, but the annual increase had dropped from 3.1% in December to 2.5% in February.