Retail sales dive - but we're still buying Kit-Kats

Retail sales fell at their fastest rate for 18 months in January, as the snow kept us off the high street...

Last Updated: 06 Nov 2012

Yet more disappointing news on the health of the UK economy, although this one won’t come as much of a surprise: UK retail sales fell 1.8% in January, the month that saw VAT return to 17.5% and half the country buried under a foot of snow. Nonetheless, this was the biggest drop in sales since mid-2008, and was three times steeper than analysts had expected - not exactly the kind of numbers that signal an imminent recovery. Although on the plus side, Nestle reported today that its sales were up more than 4% in 2009, with Kit-Kats positively flying off the shelves. Small mercies, and all that…

Most people were expecting sales to be down last month. After all, we’ve had enough retailers blame the snow for their disappointing sales in recent weeks – and with roads and public transport in a mess, it wasn’t exactly easy to get to the shops. The hike in VAT was also bound to be a big factor; anyone with any sense who was planning a big purchase in January will have bought in December instead, to take advantage of the 15% rate. Nonetheless, the extent of the drop is a bit alarming: sales of household goods were down by a whopping 13.4%, the biggest fall in over 20 years, while even fuel sales were down 11% (because we couldn't get our cars out of the drive).

The big question is whether things will perk up this month, now the weather is (marginally) better and our finances are starting to recover a bit from the damage done by Christmas. But judging by the recent evidence from the high street, not to mention the dismal news we’ve had this week on the wider economy, it doesn’t look too promising. Economists have already been muttering darkly this morning that these figures heighten the risk of a double-dip recession (which seems to be looking more likely by the day).

However, this being a Friday, we felt we couldn’t leave you on such a depressing note. So we’ve been hunting around for a little ray of sunshine, and found it in today’s results from Nestle. OK, so the fact that £6bn in profit is disappearing to Switzerland might not bring a great deal of cheer to the UK (particularly since we’re still a bit traumatised by the idea of giant foreign firms snapping up our home-grown confectioners; for Cadbury, read Rowntree). But if Nestle can push up sales by 4.1% - including a 5.3% jump in UK Kit-Kat sales, helped by its ‘Perfect Break’ ad campaign - there must be hope for other retailers too...

In today's bulletin:

Good call, Darling: economists back Chancellor's deficit plans
Retail sales dive - but we're still buying Kit-Kats
Senior public sector managers 'ill-equipped' to handle cuts
Could fit notes (not sick notes) save UK plc £240m?
How growing businesses can keep their personality

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