Britain’s retailers enjoyed healthy post-Christmas sales, according to a survey of the high street in January.
A sharp fall in the cost of petrol, which has dramatically improved disposable incomes, was credited with maintaining spending levels after the traditional Christmas bonanza.
The CBI distributive trades survey found that 50% of shops reported an increase, with only 10% reporting a fall, sending the index to +39%, compared with an expected balance of 35%.
Clothes, furniture and food retailers recorded the biggest rises, while the sales of sports gear and DIY goods suffered. It was a particularly strong month for clothing, with the index reaching a 23-month high. Analysts said intense competition among major retailers kept prices in check and harsher winter weather encouraged a rush to buy warmer clothing.
Rain Newton-Smith, the CBI’s director of economics, said that, after November’s Black Friday surge ebbed away, retailers recorded solid footfall over the Christmas trading period, leading to further robust growth in sales in the new year.
“Falling oil prices and low inflation mean consumers have a bit more money in their pockets. We expect to see this translate into strong sales growth in the months ahead,” Newton-Smith said, adding that firm growth was anticipated again in the year to February. She said shops selling jewellery and secondhand goods were also doing well.
The only blot on an otherwise rosy landscape was the finding that almost as many retailers reduced their orders with suppliers as increased them, leaving a wafer-thin balance of +2%.
The CBI said this figure was below expectations, although that it was likely to rise next month.
Howard Archer, the chief UK economist at IHS Global Insight, said: “The prospects for retail sales and consumer spending overall for 2015 currently look bright, given significantly improving real earnings growth, rising employment and elevated confidence.
“Consumers’ purchasing power should see marked improvement in 2015 due to extremely low consumer price inflation and rising earnings growth, while employment is likely to keep on rising. Furthermore, it now looks highly possible that interest rates will not rise until 2016,” he added.
