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| Surprise UK retail sales drop fuels triple-dip recession fears | Surprise UK retail sales drop fuels triple-dip recession fears |
| (about 3 hours later) | |
| Fears Britain may be heading towards an unprecedented triple-dip recession flared again as the government reported a surprise drop in high street spending last month. | Fears Britain may be heading towards an unprecedented triple-dip recession flared again as the government reported a surprise drop in high street spending last month. |
| Despite surveys suggesting shoppers had been out in force in January, the Office for National Statistics said the volume of retail sales fell by 0.6% in January. | Despite surveys suggesting shoppers had been out in force in January, the Office for National Statistics said the volume of retail sales fell by 0.6% in January. |
| This followed a revised 0.3% drop in December and reflected the tough trading conditions for shops and stores in the two key trading months of the year. Last month saw a number of high-profile casualties such as HMV and Blockbuster. | This followed a revised 0.3% drop in December and reflected the tough trading conditions for shops and stores in the two key trading months of the year. Last month saw a number of high-profile casualties such as HMV and Blockbuster. |
| The ONS said retail sales in January were also 0.6% lower than they had been a year earlier – the first time the annual rate of spending has turned negative since the summer of 2011. | The ONS said retail sales in January were also 0.6% lower than they had been a year earlier – the first time the annual rate of spending has turned negative since the summer of 2011. |
| Although the second half of the month saw heavy snowfalls, analysts had been optimistic that spending in January would bounce back from a disappointing December and had been pencilling in a 0.5% increase. | |
| The ONS said the cold weather had dampened spending, particularly among smaller food stores. A 1.6% fall in sales of groceries in January was a big factor in last month's drop in activity, but household goods stores also suffered. | The ONS said the cold weather had dampened spending, particularly among smaller food stores. A 1.6% fall in sales of groceries in January was a big factor in last month's drop in activity, but household goods stores also suffered. |
| Quarterly data – a better guide to the underlying trend – highlighted the pressure on the sector resulting from the squeeze on consumer spending power. | Quarterly data – a better guide to the underlying trend – highlighted the pressure on the sector resulting from the squeeze on consumer spending power. |
| Retail sales volumes in the three months to January were 0.8% lower than in the three months ending in October, and were down by 0.6% excluding fuel. | |
| James Knightley, economist at ING, said: "This adds to the negative news flow with worries over the UK's EU referendum and the Scottish independence vote along with a potential rating downgrade all helping to keep downward pressure on sterling." | James Knightley, economist at ING, said: "This adds to the negative news flow with worries over the UK's EU referendum and the Scottish independence vote along with a potential rating downgrade all helping to keep downward pressure on sterling." |
| Samuel Tombs, an analyst at Capital Economics, said: "January's surprise fall in the official measure of UK retail sales volumes brings the recent run of better economic news to an abrupt end." | Samuel Tombs, an analyst at Capital Economics, said: "January's surprise fall in the official measure of UK retail sales volumes brings the recent run of better economic news to an abrupt end." |
| Tombs said he expected retail sales to bounce back in February after the poor weather: "Nonetheless, 2013 still looks set to be another tough year for retailers, given the likelihood of a further significant squeeze on real pay and a weaker jobs market." | Tombs said he expected retail sales to bounce back in February after the poor weather: "Nonetheless, 2013 still looks set to be another tough year for retailers, given the likelihood of a further significant squeeze on real pay and a weaker jobs market." |