Of course, all the signs had been pointing in that general direction. At the end of January, the CBI’s Distributive Trades Survey proclaimed that retailers had actually totted up a marked increase in sales volumes. But that was before the big freeze sent shoppers scurrying home to avoid the snow and hail.
The good news is that this 0.6% drop in sales in January is a whole lot better than the contraction we usually see during snow-stricken months (probably because in some areas it was more of a sprinkle than a deluge). Back in the snowy December of 2010, retail sales plunged 1.9%.
The problem is that the contraction is due to more than just snow. Consumer demand has been falling steadily: sales are down for four consecutive months and the previously estimated 0.1% drop in December has now been revised down to a steeper 0.3%. The food sector has been especially hard-hit, dropping 2.6% year-on-year to the lowest level since April 2004. In contrast, online retail is flourishing. The amount spent on the web now accounts for 10.1% of all retail spending, excluding fuel.
And then there’s the latest batch of gloomy data from the Office for National Statistics concerning real pay. Apparently, UK workers are on the same salaries as they were ten years ago; inflation has eaten away at any pay rises over the last three years. This means that the retail environment is likely to remain subdued indefinitely.
However, before we all cry ‘the triple dip is nigh’, it’s worth noting that these retail sales are not used to work out GDP estimates. With various PMI statistics showing signs of increased confidence – manufacturing is doing especially well – there could yet be a slight uptick in the UK economy in the coming quarter. It’s a slim chance, but it’s a chance.