Retail sales grew by 1.2% year on year in January, slowing down from growth of 4.2% in January 2023, a survey showed on Tuesday.
The figures from the BRC and KPMG showed food sales growth decelerated to 6.3% over the three months to January, down from 8.0% a year prior. A fall of 1.7%.
The BRC – KPMG retail sales monitor is the leading indicator of retail sales (published since 1995), two weeks before the official UK monthly retail sales, the BRC - KPMG Retail Sales Monitor (RSM monthly report) is a key indicator of consumer demand and the health of the wider economy.
Slowing retail growth is never a good sign as it suggests low consumer confidence. This however could be tied to the rising tensions in the middle east where supply chains are facing uncertainty, this could directly be affecting retail growth. However, it is unlikely the case, consumers may have been more conscious of their spending this month due to Christmas purchases, but this is also unlikely to be the case as it was reported that retail sales grew by only 1.7% compared to higher growth in December 2022. It seems that the main reason behind a slowing rate of growth for retail sales is a lack of confidence in consumers after a year of economic trouble consumers are deciding to spend less overall.
With suggestions that inflation will fall during 2024, expectations are that this temporary slow growth in retail sales will only last a short while, especially as wage growth is now ahead of inflation, it’s only a waiting game for real incomes to recover and families to start spending more.
However, compared to the retail sales index (RSI): Retail sales volumes are estimated to have fallen by 3.2% in December 2023, from a rise of 1.4% in November 2023 (revised up from an increase of 1.3%); December's decrease was the largest monthly fall since January 2021, when coronavirus (COVID-19) restrictions affected sales. This continues the suggestion alongside the BRC and KPMG figures that retail growth has slowed down.