‘Staggeringly strong’ retail sales catch City pundits off guard

By Scott Reid
Published on Saturday 18 February 2012 00:00

SHOPPERS shrugged off their austerity woes last month and hit the high street, generating “staggeringly strong” sales figures, which add to signs that the economy may be returning to growth.

Yesterday’s official numbers caught many in the City off guard, though business leaders warned that heavy discounting was eating into retailers’ margins.

The Office for National Statistics (ONS) said sales volumes rose 0.9 per cent between December and January, the strongest performance since last April’s royal wedding and defying expectations of a 0.4 per cent fall.

Bank of England policymakers and UK government ministers are hoping that consumers will spend more this year to support the fragile economy as inflation falls back towards target.

A pick-up in consumer confidence and traditional January discounting may have lifted sales during the month, boding well for GDP growth in the first quarter of this year following a 0.2 per cent contraction in the closing months of 2011.

David Kern, chief economist at the British Chambers of Commerce, said the upturn in sales supported the view that a fall back into recession can be avoided. “This increase shows that the economy is slowly improving and supports our view that GDP will return to positive growth in the first quarter of the year. The figures support the view that inflation in the high street is falling.”

But Kern warned: “Despite the welcome boost in retail sales, we cannot simply rely on consumer spending if we are to sustain growth in the economy. Increasing net exports and business investment is crucial to driving recovery.”

Richard Driver, currency analyst for Caxton FX, described the ONS data as staggeringly strong and said the figures had “caught the market completely offside.”

Comments

There are 1 comments to this article

Order by:

• Newest first
• |
• Oldest first

Page 1 of 1

• 1
• Show all

1

e2toe4

Saturday, February 18, 2012 at 08:37 PM

These figures may not show what the experts say they know--but indicate how little they know. The facts that people are converting cash into things and not saving it is a function of very low interest rates lasting for a very long period.

• Report Unsuitable

Order by:

• Newest first
• |
• Oldest first

Page 1 of 1

• 1
• Show all

Logged in as:

Comment here. Start typing your comment here:

Post comment

Please adhere to our Community guidelines

Your view

Please sign in to be able to comment on this story.