According to a recent report from the Confederation of British Industry (CBI), UK retailers experienced a decline in sales during the month of January. This decline is part of a downward trend in retail sales that began in April 2023. The CBI’s report reveals that retail sales fell at the sharpest pace in three years during the year leading up to January, and this slump is expected to continue at a rapid pace in the following month.
The weighted balance of retail sales for January was -50%, compared to -32% in December. This figure represents the percentage of retailers reporting a year-on-year decline in sales, to a greater or lesser extent, compared to those that did not. The CBI noted that retailers felt sales were poor for the time of year in January, with volumes falling significantly short of seasonal norms. This decline marks the largest drop since May 2020. However, there is some hope that sales will be slightly less disappointing in the coming month.
When looking at specific sectors, most clothing stores experienced declines in sales volumes, although the decline was slightly better than the previous month. The survey also revealed that internet sales volumes declined at a faster rate in January compared to December. It is anticipated that online sales will continue to decrease further in February.
Martin Sartorius, CBI Principal Economist, expressed concern over the deteriorating activity in the retail sector in 2024. He attributes this decline to the impact of higher interest rates on mortgage payments and household incomes. Additionally, the upcoming increase in business rates and the National Living Wage will further burden retailers at a time when they are least equipped to handle higher costs.
Overall, the CBI’s report paints a bleak picture for the UK retail industry in January and the months to come. The continued decline in sales, combined with other economic factors, creates a challenging environment for retailers to navigate.
For more information on this topic, you can visit the Confederation of British Industry’s website by clicking here. Additionally, if you’re interested in understanding the impact of interest rates on retail sales, you can find a relevant article by clicking here.