The CBI has today reported a sharp fall in retail sales for the month of January due, in part, to the severe wintry weather and the rise in VAT which has hit consumer demand.
According to the lobby group’s monthly survey (between January 4 and 15), more than a quarter (28%) of retailers said sales had risen in the past year, while 36% said they had fallen.
Andy Clarke, chairman of the CBI distributive trades panel and chief operating officer of Asda, said: “The big freeze kept many shoppers away from the January sales and the VAT hike has hit bigger purchases like furniture and electricals.”
Meanwhile, Howard Archer, chief European and UK economist with IHS Global Insight, comments: “The CBI distributive trades survey… reinforces the heightened concerns over the strength and sustainability of the recovery.
“Households face still very challenging conditions, notably high unemployment, low earnings growth, high debt levels, January’s VAT hike and the prospect of further fiscal tightening ahead that will very likely include further tax hikes,” he added.
Yesterday, official figures revealed that the UK economy grew by 0.1% between the October and December period, suggesting that the economy has finally emerged from its worst recession since records began in 1955.
Economists had expected that the economy would experience positive growth in the fourth quarter but growth of around 0.4% was expected.
Both sets of figures will undoubtedly raise concerns about the pace of the UK’s recovery.
In the meantime, the CBI survey established that grocers and footwear retailers were the only sectors to experience a strong annual sales increase in January.
However, the CBI said the situation should stabilise in February.