UK retail sales bounce back after two-month decline
By Oliver Haill
Date: Thursday 22 Mar 2018
(ShareCast News) - UK retail sales last month bounced back more strongly than expected after two months of declines, though non-food store sales continued to wane.
Retail sales volumes in February increased 0.8% on the month before, more than the 0.4% rise in volumes that economists had forecast and up from January's figure, which was revised to a fall of 0.2%. Increases in volumes were seen across all main sectors except non-food stores in February, while sales values also rose 0.8% on the month.
Excluding fuel, retail sales were up 0.6% month-on-month in February, again beating a 0.4% average forecast and rebounding from a 0.2% fall the month before.
After falls in the preceding two months, retail sales volumes were down 0.4% for the three months to February. The value of retail sales, however, was up 0.4% in the same period.
Compared to February last year, retail sales rose 1.5%, which was unchanged from the month after that figure was revised up. Excluding fuel, retail sales were up 1.1%, down from a revised 1.3% for the month before.
The breakdown shows that the rebound was fairly broad based with the exception of continued weakness in non-food store sales, which fell 0.3% month-on-month.
"Retail sales did grow in February, with increases seen in food, non-store and fuel, but this followed two months of declines in these sectors," said ONS senior statistician Rhian Murphy.
"However, the underlying three-month picture is one of falling sales, mainly due to strong declines across all sectors in December."
Shop price inflation continued across all store types, but at a lower rate than the previous month due to a slowdown in price growth, with prices increases falling from 3.1% in December to 2.5% in February. Clothing and household goods stores continued to see stronger price rises, however.
The retail sales deflator continued to ease, falling to 2.3% on the year in February from 2.9% in December.
Given the negative growth in December and January, the Q1 carry over from retail sales is still marginally negative, and weaker than in Q4, noted Barclays Research.
Barclays economists said the bank's own spend trend analysis remains buoyant but the Visa index points to weakness.
"February credit card indicators confirm the overall subdued trend in consumer spending growth even though, there has been some divergence as of late: while the visa spending data continues to print large negative yearly growth rates, the Barclays index grew at 3.8% y/y.
"Looking at surveys, recent prints of BRC or CBI have mostly confirmed recent trends without delivering new insights. The GfK consumer confidence declined in February as households savings intentions reached the highest level since September 2008, suggesting that the upside to consumption going forward may be limited."
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