Official figures from the Office for National Statistics (ONS) released today show that retail sales fell last month, adding to recent evidence that consumers are starting to rein in their spending amid prices rises and economy uncertainty caused by the Brexit vote.
Sales volumes fell by 0.3% in January compared with the previous month. Analysts had predicted a 0.9% rise following December’s dip.
The ONS said that higher fuel and food prices were key factors in the weaker data with average store prices (including fuel) increasing by 1.9% on the year.
Compared with January 2016, sales rose 1.5%, although this was weakest performance since November 2013.
Meanwhile, in the three months to January, retail sales saw the first signs of a fall in the underlying trend since December 2013, down 0.4%.
Online sales increased by 10.1% year-on-year, but fell on the month by 7.2% – accounting for approximately 14.6% of all retail spending.
Richard Lim, Chief Executive of Retail Economics said “these figures are significantly worse than expected.”
He added: “Retail sales were expected to come back to earth with a bump but this level of weakness suggests the reality of tighter personal finances has hit households hard. The important factor now is just how much wind has been knocked out of their sails given the challenging consumer outlook.
“There are also growing concerns that spending has become increasingly debt-fuelled. The latest data showed unsecured lending rising at the fastest pace since the financial crisis. What’s more, repayment of debts was one of the biggest concerns for consumers heading into 2017, according to our research. This is likely to be the first real sign of much more challenging times ahead.”