U.K. retail sales fell in January at the fastest pace in almost three years, reversing an increase in December when discounting by stores lured shoppers, according to the Confederation of British Industry.
The gauge of annual sales growth fell to minus 22, the lowest since March 2009, from 9 in December, the London-based business lobby said in a report today. A gauge of expected sales for next month was at minus 10, indicating retailers expect sales to decline again in February.
Rising unemployment is undermining confidence and curbing demand in the U.K. after consumers suffered what Bank of England Governor Mervyn King said was a “ferocious squeeze” in 2011 from soaring inflation. While consumer-price growth is easing, household spending may be slow to recover as wage growth remains “modest,” according to the CBI.
“Shoppers have reined in spending across the board at the start of the new year after taking advantage of early discounting last month,” Ian McCafferty, chief economic adviser at the CBI, said in a statement. “Family budgets are under continuing pressure with inflation still high and wage increases modest.”
A measure of three-month sales volumes fell to minus 11 this month from minus 7 in December, the CBI said. An index of the volume of sales for the time of year dropped to minus 20 from minus 16. With retail demand weakening, a gauge of orders placed on suppliers dropped to minus 14 from minus 4.
The CBI questioned 75 retailers between Jan. 3 and Jan. 17 for the survey.