Official figures from the Office for National Statistics (ONS) show retail sales volumes were flat (0.0%) in February as wet weather put off shoppers from heading to the high street.
However, the month-on-month figure beat analysts’ expectations of a small contraction and follows a better-than-expected 3.6% rise in January when the sector rebounded from a disappointing Christmas.
Analysts suggested that the latest reading adds to signs that the UK economy is slowly recovering after entering a recession at the end of last year.
The ONS noted that clothing sales (+1.7%) rebounded in February after recent falls as people invested in the new season’s collections. However, this was offset by a fall in demand for fuel and weaker food sales (-0.3%)
Meanwhile, online sales increased 2.1% as consumers avoided the wet weather by shopping from home.
Alex Kerr, economist at research company Capital Economics, commented: “Unchanged retail sales volumes in February, as shoppers largely shrugged off the unusually wet weather, provided further evidence that a rebound in retail activity, and perhaps the wider economic recovery is underway. And as inflation continues to fall, rising real household incomes should support retail activity throughout 2024.”
Meanwhile, Rob Wood, economist at consultancy Pantheon Macroeconomics, predicts that retail sales volumes were on track to “rebound strongly in Q1, helping the economy leave last year’s recession behind”.
He added: “If overall retail sales volumes hold flat in March, they will rise 1.7 per cent quarter-to-quarter in Q1, the strongest since the post-lockdown surge in the summer of 2021.”
Kris Hamer, director of insight at the British Retail Consortium (BRC), also noted that wet weather had dampened demand and depressed footfall, but said: “Retailers are hopeful that with warmer weather and potential interest rate cuts around the corner, consumer confidence will soon spring back.”
Speaking to Reuters yesterday, the Chief Executive of clothing retailer Next stated that the outlook for UK consumers is the best it has been since before the pandemic in 2020.
“We’re not negative about the consumer outlook, it’s a first for us for some time,” said Simon Wolfson after the group reported annual results.
“That doesn’t mean we think the consumer environment’s going to be hugely ebullient, we just don’t think that consumers are facing the same headwinds they were facing at this time last year.”
