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Strong ONS January sales figures distorted, says BRC

Published: 18 February 2011
Retail sales volumes grew 5.3% year-on-year in January, according to figures released by the Office of National Statistics (ONS) today.
Strong ONS January sales figures distorted, says BRC
Compared with December, volumes also grew by 1.9%, however the monthly pattern of retail sales has been affected by the extremely bad weather in January 2010 and December 2010, as well as VAT changes in both years, warned the ONS.

Year on year, the volume of sales for predominantly food stores decreased by 2.3% in January, while predominantly non-food stores saw an increase of 9.5%, with rises across all sectors in this area.

Total sales values increased 6.4% year-on-year on a non-seasonally-adjusted basis. However, a statement from the British Retail Consortium said that while this figure is strong, it is also distorted by factors unique to January.

BRC director general Stephen Robertson said: "Superficially, these are strong figures but they don't indicate any permanent revival in customers' willingness to spend. Though a 6.4% increase in the total value of sales is greater than the 4.2% recorded by our own Retail Sales Monitor for the same period, it is telling the same story."

Mr Robertson said growth in January was driven by a short but strong burst of non-food buying early in the month, some of which was held over from December when severe weather stopped people getting out. Some was also driven by shoppers out to beat the VAT rise in the first few days of January.

When the VAT rise did come in, damage was minimal as the effect on prices was largely lost among heavy discounts and promotions, he added.

However, he said: "These are short-term influences. Our own figures show spending tailed off sharply as the month developed. Slumping consumer confidence indicates concerns about jobs and finances are now reasserting themselves. February's results will be a better indicator of how things really are."

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