Things are looking far sunnier this year – at least initially. Year-on-year, sales volumes were up 5.3% in January, which is the biggest annual increase for more than six years. Analysts had forecast a monthly rise of 0.5% and an annual increase of 4.1%, so by that comparison at least things are moving remarkably well.
But by now you may have spotted the snag here. It’s easy to look good against a month where snow hampered deliveries and convinced lily-livered consumers not to shop. As the ONS points out, it’s hard to disentangle the role of weather from the final stats - or the rush to beat the VAT rise, introduced in early January. Retail figures are known as a famously erratic indicator, and such factors are only going to distort figures even further.
The true test will of course be the stats for February, when we can expect the underlying trends to stand out more clearly. Like a thumb that's been whacked with a hammer. Commodity prices are still on the up, inflation’s at twice the Bank of England’s target, and take-home pay is the lowest since the 1920s. Meanwhile mport costs are rising, household debt is up, as is unemployment, and the Government is cutting spending. No wonder then that a British Retail Consortium survey says spending growth has slowed to ‘pretty sluggish rates and has yet to recover', or that Nationwide’s survey of consumer confidence fell at its ‘fastest rate on record’ over January.
The prudent approach may be to savour the sight of these buoyant figures while we’ve got them…