British retailers log sales growth in typically tough January

British retailers continued to battle "tough" conditions in January, but experts pointed to higher sales during a typically difficult month for trading.

Figures from the British Retail Consortium (BRC) and KPMG showed like-for-like retail sales rose 0.6% in January, compared with a fall of 0.6% for the same month in 2017.

Total sales rose 1.4% last month, following a rise of just 0.1% a year ago.

It was dubbed a decent performance by experts, as the post-Christmas period tends to put a strain on sales.

Helen Dickinson, BRC chief executive, said: "The persisting tough trading environment played out at the start of the year with a mixed set of trading updates and subsequent announcements.

"Sales as well as profits are seemingly harder to come by.

"Against this challenging backdrop, 2018 didn't have a bad start during what is traditionally a lean month, with sales creeping up in line with the year's average."

She said that the sector continued to struggle from "divided fortunes" for food and non-food sales.

British households are still in the midst of an income squeeze on the back of higher inflation and weaker wage growth, that has left consumers with less cash for non-essentials.

Food sales increased increase 2.9% on a like-for-like basis in the three months to January, while total sales rose 4.1% over the period.

In contrast, like-for-like non-food retail sales fell 1.2% and dropped 0.6% on a total basis, which is below the 12-month average decrease of 0.1% and marks the first 12-month average drop since September 2009.

Non-food sales fared better online, rising 5.3% in January - but that still fell short of the 8% growth booked in digital sales during the same month a year earlier.

In store, those sales fell 2.9% on a total basis in the three months to January, and 3.6% like-for-like.

"Clothing, however, bucked the winter trend for the non-food categories. Some retailers were able to scale back promotions, having shifted more of their stock during the festive sales than last year, and saw encouraging early demand for their new season ranges," Ms Dickinson said.

"Overall though, the going remains bumpy as consumers are still seeing wages fall in real terms. Although inflation will ease a bit this year these pressures will remain."

The BRC chief said it was essential that a Brexit transition deal is secured to provide "much needed certainty" to consumers and businesses.

Separate figures from Barclaycard showed consumer spending jumped 3.9% year-on-year last month, propelled by a 4.1% rise in spending on everyday essentials.

Spending on non-essentials grew 3.8% but was down from 4.2% in December as clothing and travel logged weaker growth.

However, evenings out with family and friends drove a double-digit rise in pubs and restaurants - up 12.8% and 10.5%, respectively.

Paul Lockstone, managing director at Barclaycard, said it was a strong start to the year in terms of spending, but "faltering confidence levels" suggests consumers are suffering from a "post-Christmas slump" and the wider impacts of inflation.

"While spending on the 'experience economy' proved to be a natural and welcome antidote to the January blues, the dip in sentiment revealed by our consumer confidence data, allied to concerns over economic and political uncertainty, is quite telling," he said.

"It suggests that caution will continue to be the watchword for many consumers as they allocate their household budgets in the months ahead."