UK retail sales rise but non-food struggles, finds BRC
UK retail sales picked up in December, according to data from the British Retail Consortium released on Tuesday, as retailers began to pass on higher import prices to consumers.
Food & Drug Retailers
3,956.27
16:59 26/04/24
General Retailers
3,910.25
16:59 26/04/24
With strong food sales making up for sluggish non-food performance, the BRC and KPMG revealed that sales grew 1.0% in December compared to the same month the year before, with total sales values rising 1.7% year-on-year.
This came as the BRC's measure of inflation, the shop price index, showed a year-over-year increase to -1.4% in December from -1.7% in November, its highest rate since August 2015.
Food sales over the three months to December increased 1.1% on a like-for-like basis and 2.4% on a total basis, above the 12-month average growth of 1.0% and the highest three-month average in more than three years.
But with non-food sales in the quarter rising 1.1% on a like-for-like basis, with total sales up 1.3%, it was the lowest 12-month average total growth in four years.
Online sales showed the effects of the continued structural shift, with sales up 7.2% in the three-months to December as in-store sales declined 1.2% on a total basis and 1.4% on a like-for-like basis.
Online gained market share too, taking non-food online penetration to a substantial 24.3%.
"Despite the slow start to the Christmas trading period, the week itself was a bumper one and exceeded expectations," said BRC chief executive Helen Dickinson.
"It delivered the majority of sales growth for the month, proving even bigger than the Black Friday period- which is the reverse of what we saw the year before.
She said shoppers had held out for the Christmas week, which saw sales up around 40% compared with the other weeks of the month.
KPMG's head of retail, Paul Martin, noted that star Christmas categories were home accessories, beauty products and toys.
Economist Sam Tombs at Pantheon Macroeconomics said the growth in like-for-like sales values was chiefly because retailers have begun to pass on higher import prices to consumers, with the the BRC’s shop price index increasing to its highest rate since August 2015.
"December’s official figures on retail sales volumes therefore likely will not strike an upbeat tone," Tombs said said, pointing to other measures of retail spending softening in December such as BDO’s measure of like-for-like sales values and Visa’s falling consumer spending index.
"Meanwhile, the prospects for consumer spending in 2017 continue to look bleak, given that households’ real incomes will stagnate due to a toxic combination of rising inflation, a tougher fiscal squeeze and slower job gains."
Much more positive about the consumer outlook, analyst Clive Black at Shore Capital said the robust retail sales figures for December led him to believe that 2017 can "start in a sound manner".
"We happen to believe that for now the UK consumer is in a sound position in the main, with high levels of employment and secondary economic data pointing to robust GDP growth for 2016; hence we see no reason why the economy should fall off a cliff in Q1 2017," he said.