Sales rise 2.6 per cent, with discounting helping shift stock, but inflation is close behind

Retailers see January boost

Retailers saw a boost during January with like-for-like sales rising 2.6 per cent after a weak Christmas trading period

Sales rose by 2.6 per cent during the five weeks between December 30th and February 2nd, however, it was down on the 3.1 per cent recorded the same time last year, after a particularly weak January 2006.

In terms of the three-month trend, sales growth rose to 1.5 per cent, compared to the 0.8 per cent recorded in December. Total sales rose to 3.7 per cent, up from 2.8 per cent, reflecting the growth in retail space.

Consumer confidence for large purchases such as televisions fell further, in contrast to expectations that laptops would continue to see growth.

The report found that people are still wary to commit to large purchases in the current retail environment.

It, however, did find that discounting saw customers making large ticket purchases, further re-enforcing the feeling that customers are currently very price sensitive.

Speaking about the findings, Stephen Robertson, director general of the BRC said: "Following three months of weak year-on-year growth, this appears to be significantly better but the figures don’t mean consumer confidence is reviving yet.

"The headline results conceal a mixed picture. In part, rising overall sales values were caused by increases in some food prices."

His assertion was backed up by figures out today from the Office of National Statistics’ Consumer Price Index, which show that food prices, alongside petrol drove inflation to 2.2 per cent.

Helen Dickinson, head of retail at KPMG agreed, adding: "Another strong performance from food shows retailers are reluctantly passing on some price inflation to the consumer."

The figures also revealed that discounting on large January sales items was lower than in previous years. However, it still hit retailers, as Robertson explained: "New Year home updating helped sales of large electricals…but retailers’ margins were hit as it took heavy discounting to release pent-up customer demand."

Dickinson added: "While the ‘doom-mongers’ may be temporarily silenced by this month’s results, it’s certainly too early to draw any conclusions about how the rest of the year will pan out.

"The growth of 4.9 per cent in total and 2.6 per cent in like-for-like sales was heavily skewed by a strong performance in week one, as January sales absorbed demand carried over from a poor December, which then deteriorated as the month progressed," she added.

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