Strong start to year for retail but cost of living squeeze could mean tough months ahead
Year-on-year sales growth of 11.9% was boosted by comparison with a lockdown period last year as well as the impact of high inflation but was still described as "encouraging" ahead of a period when consumers may have to tighten their purse strings.
Tuesday 8 February 2022 05:41, UK
Retail enjoyed a strong start to what could be a tough year ahead as demand for furniture and household appliances helped sales grow by 11.9% in January, according to industry figures.
The year-on-year increase in revenues was partly flattered by high inflation - which meant the same goods often cost a lot more - but the figure was still a big pick-up after a subdued Christmas.
However the British Retail Consortium (BRC), which compiled the data with KPMG, warned that the cost of living surge was likely to mean shoppers tightening their purse strings in the months ahead.
January's data inevitably showed a sharp improvement on period a year ago when lockdowns meant that non-essential shops were shut.
But sales were also 7.5% higher than pre-pandemic levels at the start of 2020.
BRC chief executive Helen Dickinson said: "It is encouraging to see such strong sales in January, even once inflation has been accounted for.
"Food sales were more muted than in previous months, as people went back to eating out more often.
"Consumers prioritised home purchases, boosting the sale of household appliances, electronics and homeware.
"In what may be signs of a return to pre-pandemic trends, furniture was the stand-out performer in January, after transport delays in the Christmas period began to ease."
She said retailers faced challenges in the months ahead with consumers potentially shifting some of their spending to restaurants, cafes and live events.
"Furthermore, rising inflation, driven by higher costs of production, higher energy and transport prices, as well as other looming price hikes this spring will mean consumers will have to tighten their purse strings," Ms Dickinson added.
Separate figures from Barclaycard covering the wider area of consumer spending - taking in the hospitality and leisure sectors as well as retail - showed growth of 7.4% compared with 2020.
That was the weakest growth figure since April last year, with the impact of Omicron restrictions, which were still in force at the start of the year, partly blamed.
The result was slower fuel sales growth, as motorists travelled less, and a decline for hospitality and leisure trading, the report said.
Meanwhile, a survey by Barclaycard found 89% were concerned about the impact of rising inflation on household finances while 30% said they expected higher household bills to affect how much they spend on discretionary purchases.