Unlock the Publisher’s Digest for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
UK retail spending growth slowed in January, according to new industry data which suggests households continue to be squeezed by the cost of living crisis.
The value of retail sales increased at an annual rate of 1.2% in January, the British Retail Consortium said on Tuesday. According to the trade body’s data, this growth is lower than December’s 1.7% growth and the quarterly average of 1.9%.
The growth rate was also lower than the 4% rate of consumer price inflation in December, indicating that rising sales masked a decline in volumes, a trend observed over the past three years.
“Weak consumer demand has led to slowing retail sales growth,” said BRC CEO Helen Dickinson. “Although the January sales helped increase spending in the first two weeks, this did not happen throughout the month.”
The data, compiled by consultancy KPMG together with the BRC, provides a first indication of retail spending ahead of official data next week. Weak spending will raise concerns about the pick-up in activity seen in other economic data, such as mortgage approvals and business confidence.
The BRC data coincides with separate data released by Barclays on Tuesday, which showed a 1.7% year-on-year increase in retail spending last month, below the 3.1% average growth across the board. consumer spending.
However, the payments company, whose report also includes consumer confidence surveys, pointed to brighter spots in the economy next year.
While the 3.1% growth in consumer spending last month lagged the rate of inflation, it was up from 2.3% in December, with a notable 11.4% increase in spending on digital content and subscriptions, such as Netflix.
According to Barclays, consumer confidence is also increasing: 70% of households surveyed said they felt confident in their finances, the highest figure since November 2021.
Jack Meaning, chief UK economist at Barclays, said the increase in consumer confidence was “a positive message”, adding: “Spending appears to be on an upward trajectory [and] destined to increase more than inflation in the coming months”.
Separate sector data on Monday showed UK business activity rose faster than previously estimated and stood at an eight-month high in January.
The final S&P Global UK Services PMI business activity index rose to 54.3 last month, up from 53.4 in December and the initial reading of 53.8.
Tim Moore, of S&P Global Market Intelligence, said the PMI numbers “provide a strong boost to expectations about business activity in the service economy.”