UK retail sales fall less than forecast, clothing weak

[LONDON] British retail sales fell less than expected in February after a bumper performance the month before, suggesting consumer demand remains relatively robust, official figures showed on Thursday.

Retail sales volumes dropped 0.4 per cent last month after a 2.3 per cent rise in January, partly reflecting weak demand for new season's clothes, the Office for National Statistics said.

Economists in a Reuters poll had forecast they would decline by 0.7 per cent.

Compared with a year earlier, sales in February are up 3.8 per cent, in line with economists' expectations for them to slow from a growth rate of 5.4 per cent in January.

"Retailers had another strong month in February compared with last year, with the exception of clothing and footwear,"ONS statistician Melanie Richard said. "Some of those stores have been telling us that sales of their new spring and summer collections were hit by the cold and wet weather last month."

British consumer demand has been robust and has driven economic growth over the past couple of years, buoyed by record employment, modestly rising wages and near-zero inflation, all of which have given households more disposable income.

Last month the BoE forecast household consumption would rise by 2.75 per cent this year, the same as in 2015 and faster than the economy as a whole would grow.

But there have been some signs of a slowdown. Figures earlier this month from the British Retail Consortium showed year-on-year growth in retail spending dropped to 1.1 per cent in February from 3.3 per cent in January.

Similar ONS figures showed the value of retail sales rose by 1.4 per cent on the year in February.

The ONS said sales in the three months to February had suffered due to the sharpest drop in clothing sales since December 1990, which fell by 3.4 per cent.

Milder than normal weather in December had dented demand for winter clothing, while an unusually wet February had hurt appetite for spring clothes.

Retail sales volumes overall in the three months to February rose by 0.8 per cent, the weakest increase since August.

British supermarkets Sainsbury's reported its first quarterly rise in sales in more than two years this month, but conditions for food retailers overall remain challenging, with prices flat or falling and strong competition from discounters Aldi and Lidl.

The ONS's measure of retail sales inflation fell by 2.5 per cent in February, the smallest decline since December 2014.

REUTERS