Retail sales volumes for February have hit a nine-month low, according to new figures from the Office for National Statistics.
It turns out that optimistic January consumer spending forecasts were little more than wishful thinking. The ONS has today confirmed that retail sales for the first month of 2012 only grew 0.3%, not 0.9% as forecast. And February looks incredibly subdued, with a 0.8% decline in retail sales for the month.
So far, the UK consumer has contributed little, if anything, to economic growth. Looking at the first quarter to February, sales are up by a modest 0.7%, quite the step down from the 1.1% growth in posted in the three months to January. Of course, figures at the end of the year are always skewed by the Christmas shopping bonanza. As of next month, when December drops out of the calculation (there was a eggnog-swilling, festive 0.7% rise that month), any growth will be marginal indeed.
Consumers, squeezed by high debt, falling pay and fears over job security, have tightened their belts after the Christmas splurge and New Year sales mini-spree. And it’s no secret why, with unemployment at a 17-year high – 2.7m out of work – and ‘real’ pay down by 2.0% (despite the illusory relief of falling inflation).
But amidst all this retail woe, there are a few niches that are seeing an upturn. Internet retailers are still making a decent living, with 10.7% of all sales now made online. Non-store retailing, which includes e-commerce and market stalls, is broadly up, with sales values increasing by 8.6% and sales volumes by 9.2%.
Of course, high street players cannot hope to compete with the discounting power of the online pack. Margins are just too high. And the biggest sales falls were seen in clothing and footwear, where sales volumes have slumped by 0.4%. Sales in food stores are also down: 0.1% lower than January. Compared to February last year, however, there’s been a slight 1% uplift in the sector.
Overall sales volumes for the year have also seen a tiny lift, at 1% higher than in February 2011. And retail sales values (the amount actually spent on items) grew by 3.2 per cent between February 2011 and February 2012.
Nevertheless, the number crunchers over at the Office for Budget Responsibility will no doubt be wringing their hands at these figures. Having just revised up its 2012 forecast for household spending to 0.5% from its November forecast of 0.1%, it could well end up with egg on its face. Again.