High street retailers still suffering in January - CBI

There was further disappointing news from the under-pressure high street on Thursday, when the CBI reported weaker than expected January sales data.

Traditionally, the post-Christmas sales period is a busy one for retailers, as old stock is cleared and consumers seek bargains.

But according to the CBI’s Distributive Trades survey, 33% of retailers said sales volumes were ahead in January against the same period last year, while 21% said they were down. That gave a net balance of +12%, down from +20% in December.

That was considerably below what retailers had expected (+17%), and also just missed the consensus estimate of +13%.

Only 9% of retailers reported good sales volumes for the time of year, with 25% saying they were poor, giving a rounded balance of -17% – the lowest since July 2013, and down from -3% in December.

However, online shopping continued to enjoy high sales volumes, at +55%.

Retailers responded to the CBI’s Distributive Trades Survey between 27 December and 12 January. Of the 107 firms that took part, 49 were retailers, 48 were wholesalers and 10 were motor traders.

Anna Leach, head of economic intelligence at the CBI, said: “Retailers have seen fairly modest sales growth this month overall, but it is online retailers who have really set the pace during the January sales.

“Household spending will remain under pressure this year, from higher inflation and low wage growth, which will continue to weigh on sales growth in the retail sector.”

Most retailers surveyed thought sales growth would continue at roughly the same pace in February as in January, the weakest outlook in three months.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “January’s CBI survey suggests that retail sales probably didn’t recover all of the ground lost in December, when the official measure of volumes fell by 1.5% month-to-month.”

He cautioned that the survey can be misleading, as it is a small sample and covers the first half of the month only.

But he added: “For now, consumers appear to have started 2018 cautiously, consistent with our view that the economy will lack the momentum required to warrant another interest rate rise until the end of the year.”