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The Markets
by Proactive
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The Markets
by Proactive
Proactive UK has moved.
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Retail

Retail sales pick up in February but remain subdued

UK retail sales increased by 1.2% in February, following a rise of 0.9% in January which was revised from an advance of 0.5%; when compared with the same month a year earlier sales volumes fell by 3.5%.

But figures from the Office for National Statistics showed that sales volumes were still 0.3% lower in the three months to February when compared with the previous three months.

Non-food stores sales volumes rose by 2.4% over the month because of strong sales in discount department stores.

Food store sales volumes rose by 0.9% following a rise of 0.1% in January, with the ONS reporting some anecdotal evidence of reduced spending in restaurants and on takeaways because of cost-of-living pressures.

Online sales volumes rose at a slower rate of 0.2% following a rise of 2.9% in January.

Automotive fuel sales volumes fell by 1.1% following a rise of 1.1% in January 2023 when rail strikes may have increased car travel.

In a statement, the ONS director of economic statistics, Darren Morgan, said: "Retail grew sharply in February with sales returning to their pre-pandemic level.

"However, the broader picture remains more subdued, with retail sales showing little real growth, particularly over the last eighteen months with price rises hitting consumer spending power."

Separately, UK consumer confidence climbed slightly in March despite the cost-of-living crisis remaining a "stark reality" for most, according to a closely watched survey.

GfK's long-running Consumer Confidence Index improved two points in March, masking ongoing concerns about personal finances, rising to an overall score of minus 36.

But confidence in personal finances over the next 12 months remains weak, falling three points to minus 21, three points lower than this time last year.

Gabriella Dickens, senior UK economist, at Pantheon Macroeconomics suggested despite the rise in retail sales it was “too soon to claim that a recovery has taken hold.”

She pointed out that sales volumes fell in the three months to February by 0.3% compared to the previous three months and noted the GfK survey showed consumer confidence “remains very weak, despite edging up in March.”

She noted that GfK’s composite index still was in the bottom 3% of all past readings since 1974, and its major purchases index rose by just 4 points to -33, well below its -7 average level in the 2010s.

“All told, then, we think that retail sales likely will merely hold steady in Q2, and then will recover only gradually in the second half of this year,” she concluded.

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