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    New Year joy for retail, but food sales decline in January

    Shoppers walk through Soho on January 29, 2022 in London, England. (Photo by Hollie Adams/Getty Images)

    Retail sector has witnessed strong sales in January, traditionally a slower month, with total retail sales growing by 7.5 per cent on a two-year basis, according to the BRC-KPMG Retail Sales Monitor.

    Year on year, sales increased 11.9 per cent, against a decline of 1.3 per cent in January last year, when the non-essential retail stores were closed as part of coronavirus restrictions.

    However, food sales decreased 0.1 per cent on a total basis and 0.5 per cent on a like-for-like basis in the three months to January. For the month of January, food was in decline year on year.

    Non-food retail sales were increased by 11.1 per cent on a total basis and by 6.5 per cent on an LFL basis during the three-month period, with sales seeing year on year in growth in January.

    The BRC added that a portion of the sales growth might be a reflection of rising prices rather than increased volumes as the sales figures are not adjusted for inflation, which is  running at historically high levels.

    “It is encouraging to see such strong sales in January, even once inflation has been accounted for,” Helen Dickinson, chief executive at British Retail Consortium (BRC). “In what may be signs of a return to pre-pandemic trends, furniture was the stand-out performer in January, after transport delays in the Christmas period began to ease.”

    Commenting on the muted food sales, Susan Barratt, IGD chief executive, said: “After a welcome uptick in food and drink sales at Christmas, 2022 has started on a downbeat note with sales struggling to match those of January 2021. Although it was always going to be a hard benchmark as we were in the peak of a third national lockdown in January last year, with food and drink sales surging as a result.”

    She noted that the new year has brought increased shopper anxiety with the cost of living rising at its fastest rate in 30 years.

    “Our ShopperVista insight reveals that 89 per cent of shoppers expect food to get more expensive in the year ahead. Coupled with the energy price cap set to rise sharply from April, some 39 per cent of shoppers expect to be worse off financially in the year ahead, up 8 per cent from last month. Therefore, we can expect more shoppers to increasingly focus on tightening their spending in the months ahead,” Barratt said.

    Paul Martin, UK head of retail at KPMG, shared the sentiment.

    “We could see a challenging few months ahead if wider macroeconomic conditions start to squeeze household incomes to the point that they start cutting back on retail spending.  Retailers are facing their own inflationary pressures and will need to take tough decisions on whether and how to pass on the increase costs they have been sitting on for some time to consumers facing their own financial challenges,” he said.

    “We could easily see the health of the sector start to deteriorate if consumers choose to sit on savings to weather the storm.”

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