- Decline in February follows surge in sales in January
- Consumer spending has helped drive U.K. economic growth
U.K. retail sales fell in February after surging the most in more than two years the previous month during post-Christmas sales.
The 0.4 percent decline was less than the 0.7 percent drop forecast by economists in a Bloomberg survey. Clothing and shoes fell 0.4 percent, with poor weather delaying purchases of spring and summer attire, the Office for National Statistics said in a report on Thursday.
While the figures show a decline on the month, sales were up 3.8 percent compared with a year earlier. Consumer spending has helped to drive U.K. economic growth amid low inflation and an increase in employment. The Bank of England said on Wednesday household expenditure has remained “resilient” in recent months.
“We doubt that February’s dip in U.K. retail sales is the beginning of a more pronounced slowdown in the pace of the consumer recovery,” said Paul Hollingsworth, an economist at Capital Economics in London. Prospects for the consumer “remain fairly bright” as low energy, fuel and food prices give real incomes a boost, he said.
In a sign of the squeeze on the retail industry, shares of the U.K. clothing company Next Plc plunged the most since the dot-com bubble burst in 2000 on Thursday after it lowered its sales forecast for the year, citing slowing household-income growth. Chief Executive Officer Simon Wolfson likened the year ahead to “walking up the down escalator, with a great deal of effort required to stand still.” The outlook for consumer spending “does not look as benign as it was at this time last year,” he said, adding that this may be the toughest year for Next since the financial crisis of 2008.
The statistics office said overall retail sales excluding fuel fell 0.2 percent in February from January and were up 4.1 percent from a year earlier.
In the three months through February, while total sales rose 0.8 percent, clothing plunged 3.4 percent, the most since 1990. Though February was wetter than usual for the month, a milder winter in general curbed sales of cold-weather gear.
Measured by the deflator, prices at stores -- including petrol stations -- fell an annual 2.5 percent in February, the least since December 2014. Still, retailers have cut prices for 20 consecutive months.