U.K. retail sales volumes drop surprisingly in January, shows CBI’s Distributive Trades Survey

The CBI’s latest monthly Distributive Trades Survey showed that U.K.’s retail sales volumes dropped surprisingly in the year to January after strong rises in the final quarter of 2016. The survey of 113 companies indicated that sales dropped moderately at the beginning of 2017. However, volumes are expected to expand in the year to February.

Volumes of dales were considered to be widely consistent with the average for the time of year, having been above seasonal norms at the end of 2016. Orders placed on suppliers remained widely the same over the year and are likely to decline slightly in February.

Grocers mainly drove the moderate fall in the volumes of retail sales. Sales at grocers dropped at the most rapid rate since August 2004. But continually healthy growth was recorded elsewhere, especially amongst clothing retailers and department stores.

Internet sales volumes growth decelerated a bit in the year to January, although the survey balance stayed above the long-run average. Wholesaling recorded the most robust volumes growth since September 2007, with anecdote pointing to purchases brought forward ahead of future price rises as well as generally resilient demand.

“This month’s decline was mostly driven by falling food sales and seems set to be short-lived, with retailers expecting sales to return next month. Headwinds are on the horizon, as past falls in sterling are expected to push up inflation over the course of this year, which will be a real squeeze on household incomes. Retailers will be under the cosh for some time yet,” stated Anna Leach, CBI Head of Surveys and Economic Analysis.