Rush to beat VAT rise boosts retail sales

THE BRC-KPMG Retail Sales Monitor for January shows UK retail sales values were up 2.3% on a like-for-like basis from January 2010, when sales had fallen 0.7%.

On a total basis, sales were 4.2% higher, against a 1.2% increase in January 2010.

Pent-up demand after December’s snow, pre-VAT rise purchases and clearance bargains boosted non-food sales at the start of the month. Sales then fell back, hit by consumer caution. Food sales growth slowed as people had less need to buy, having stocked up during the snow.

Non-food non-store (internet, mail-order and phone) sales growth fell back in January after picking up in November and December. Sales were 12.3% higher than a year ago, less than the 18.0% in December.

Stephen Robertson, Director General, British Retail Consortium (BRC), said: “On the surface, this is the best sales growth since last March, but that’s not the whole story. Comparisons are with a feeble, snow-hit performance a year ago. Growth this January was driven by a relatively short but strong burst of non-food buying early in the month. Clearance discounts and a last chance to beat the VAT rise got people buying things like furniture and electricals in the first few days.

“Later in the month sales of non-food goods slowed, particularly for bigger items, as the reality of worries about jobs and personal finances returned to customers’ minds. Generally, food sales growth was modest as people used up stocks they’d bought-in during December’s bad weather.

“Turning round consumer confidence is central to turning round the economy. A range of pressures is bearing down on customers. As it considers the Budget, the Government must not add any more.”

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