The rising cost of goods boosted retail sales in February according to the Office of National Statistics, with value sales growth significantly outpacing volume increases in purchases compared with the previous month.
Seasonally adjusted value and volume growth across retail climbed 0.8% in February on the previous month, the data
Food store value growth of 0.6% outpaced all other retail sectors. Month-on-month volume growth at 0.4% was only outdone by “non-store retailing” which grew 0.5% compared with food stores at 0.4%.
Year on year however, it can be seen the food price inflation is the weakest of the four retail sectors covered, apart from petrol stations, where value grew 0.6%
Food stores’ value increase of 0.9% year on year is marginally outpaced by non-food stores, 1%, and by non-store retailing, 1.4%. Year-on-year food stores’ volumes declined 0.2% – the only one of the four retail sectors to suffer a decline in volumes.
Online food sales enjoyed year-on-year value growth of 14% compared with all retailing at 13.7%.
Rhian Murphy, ONS senior statistician, said: “Retail sales grew in February, with increases seen in food, non-store and fuel, but this followed two months of decline in these sectors.
“However, the underlying three-month picture is one of falling sales, mainly due to strong declines across all main sectors in December.
“Store prices continue to rise across all store types, but at a lower rate than the previous month due to a slowdown in price growth, though clothing and household goods stores continued to see stronger price rises.”
Lisa Hooker, PwC’s consumer markets leader, said: “It’s good to see some growth in the sales data from February but it’s still a tough time for the UK retail industry.”
Costs remained a concern and the rising national living wage, apprenticeship levy and business rate rises had all had an acute impact on the retail industry, partly explaining some of the challenges the sector was facing in spite of this sales growth.
“Inflation began to ease in February but still remains relatively high and is a factor in explaining the growth in value of sales.
“The likelihood of another interest rate rise will be on consumers’ minds so we don’t expect any uptick in spending habits for the foreseeable future.”
PwC expected growth in consumer spending to slow down this year, but there may be light at the end of the tunnel towards the end of the year, when income could edge above inflation, easing the pressure on spending.
“The cold weather last month was not good news for retailers, and the Beast from the East hitting the country at full force towards the end of February caused disruption on the high street as shoppers stayed home.
“Some stores would have closed or worked reduced hours - all of this impacts sales figures,” said Hooker.
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