Retail sales in the UK remained below inflation in January as consumers kept a tight rein on spending, according to the latest data from the British Retail Consortium (BRC) and KPMG.
Spending rose by 4.2% in value terms, falling short of inflation which currently stands at 10.5%.
This means that, after accounting for inflation, the rise in sales masked a much larger drop in volumes.
“As Christmas cheer subsided, retailers felt the January blues as sales growth slowed,” commented Helen Dickinson, chief executive of the BRC. “Many retailers discounted heavily to entice consumer spend, and while there were bargains to be had in the January sales, retailers continue to be hit by lower margins and falling volumes. Own brand ranges remain popular across food and non-food products, and big ticket items are seeing customers trade down.”
Paul Martin, UK head of retail at KPMG, said the short-term outlook for the retail sector “remains challenging”.
“With the latest interest rate rise and utility price increases heading our way, shrinking household incomes means we will continue to see a shift in what consumers buy and where they buy from,” Martin added.
“Retailers face a tightrope as their costs rise and margins are squeezed, whilst at the same time having to ensure affordability and value for customers. Although retailers have demonstrated resilience over recent years, it is likely we will continue to see casualties both online and on the high street this year.”
