Today’s retail figures
The Retail Sales Index figures released today by the Office for National Statistics are very disappointing. Measured by the volume of sales, December 2010 was unchanged from December 2009 (when the country was only just emerging from recession). Measured by value, sales were up 2 per cent on the year, but – remarkably – down 0.8 per cent on the level seen in November.
The Retail Sales Index measured by value has been running since 1996, and during the past 15 years, it has risen, on average, by 0.26 points a month. Until December, the Index did slightly better than that last year, averaging 0.27 (though with quite a lot of variation from month to another.) The December figures are a very significant change.
The question is whether these figures are a blip or something worse. The ONS’s press release blamed the figures on higher food prices and the Christmas snow. They point out that food sales have been falling for some time, which gives some context for the 3.4 per cent year-on-year drop in sales in food shops (measured by volume, the biggest fall since these records began in 1988) in context. It’s true that the weather hit sales – individual retailers have blamed the snow, and people did comment on it at the time. On the other hand, customers knew that VAT was due to increase in January, which would have given them an incentive to brave the weather. The weather might lead us to expect less of a December boost than usual, but a decline from November, and other commentators have pointed out that these results look like more than just the effect of the snow.
It looks as though customers are hunkering down and cutting back. If this happens on a big enough scale and in other countries too, there will come a point where it affects exports and investment – and eventually jobs as well.