Leader: A flicker of hope in retail figures

Published on Saturday 21 January 2012 12:16

THERE is at least a flicker of hope in the latest figures for retail sales – welcome given the relentless downpour of bad economic news over the week.

The UK economy might just have avoided falling into recession in the final quarter of last year. But this is likely to prove a temporary reprieve, and here in Scotland trading conditions on the high streets remain dire.

The Office for National Statistics said the value of UK retail sales rose 6.2 per cent on December of 2010 while sales volumes, adjusting for the effects of inflation, showed a rise of 2.6 per cent. Not only was this better than most had anticipated, but it was also the highest year-on-year rise for 12 months. Meanwhile, direct from the high street came news yesterday of a strong sales performance by John Lewis in the week to 14 January and news of robust sales performances by companies as diverse as Poundland and Ikea.

Taking the fourth quarter as a whole, retail sales overall advanced 1.1 per cent. And as consumer spending accounts for some 63 per cent of GDP, this may prove a vital prop for the performance of the economy as a whole during the October-December quarter.

However, it is hard to be other than highly cautious about the outlook for the current quarter. Last month’s comparisons were against a severe weather-hit period in 2010, sales were boosted by aggressive discounting, household budgets continue to be squeezed by inflation and everywhere there are signs of hunkering down. The lean comfort that can be drawn is that the current downturn may not prove as severe as some have warned. And a continuing fall in inflation this year should ease the pressure on households.

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