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    Retail sales rebound as Omicron fears fade; Food sales slide

    (Photo by DANIEL LEAL/AFP via Getty Images)

    Retail sales rebounded in January as fears faded over coronavirus variant Omicron, official data showed Friday.

    Total sales volumes jumped 1.9 per cent last month compared with a record drop of 4 per cent in December when shoppers had shunned bricks-and-mortar stores with Omicron spreading rapidly, according to the Office for National Statistics.

    The ONS added that December’s data was revised down from a fall of 3.7 percent, which was already a record for that month.

    “After a sluggish December where the Omicron wave had a significant impact, retail sales rebounded in January with their biggest monthly rise since the shops reopened (from lockdown) last spring,” said ONS director of economic statistics Darren Morgan.

    The discovery of the Omicron variant in late November raised concerns about its potential effects on the global economy as countries restored some travel restrictions.

    But the highly infectious variant has proven less deadly than its predecessors.

    Meanwhile, food sales dropped, though this is compared to January 2021, when most of the country was in lockdown and households were unable to eat out.

    Responding to the figures, Helen Dickinson, chief executive of the British Retail Consortium, said inflationary pressures and increase in the cost of living might impact sales in the upcoming months.

    “Despite falling consumer confidence, retail sales held up well in January as retailers went to great lengths to keep up the Christmas momentum. Falling Covid cases and the slow return to offices offer further hope for town and city centres that were hardest hit by the pandemic,” Dickinson said.

    “Yet, rising inflation means households may be preparing for future falls in disposable income, including from April’s National Insurance and energy price cap rises. Retailers face similar challenges, with increases in transport and energy costs, global commodity prices and domestic wages. While retailers are going to great lengths to mitigate or absorb these cost increases, it is inevitable that prices will rise further in the future.”

    Retailers face rapidly surging consumer price inflation, which hit its highest in nearly 30 years in January at 5.5 per cent, and is forecast by the Bank of England to peak above 7 per cent in April.

    A separate measure of inflation used to calculate January’s retail sales data rose to 6.7 per cent, the highest on record.

    Fast-rising prices for energy and food leave consumers with less spare cash to spend on non-essentials, and 2022 looks set to bring the biggest squeeze on households disposable income in 30 years.

    January sales volumes were 9.1 per cent higher than a year earlier, when non-essential shops were shut due to lockdown restrictions, and 3.6 per cent above pre-pandemic levels.

    Retail sector as a whole was relatively resilient through the Covid-19 pandemic, with sales as a whole already back above January 2020 levels in July 2020, thanks to a big shift to online shopping.

    However some retailers, especially clothes stores with little online presence, found it much harder to recover from repeated lockdowns, the last of which ended in England in April 2021.

    Some pandemic trends have been slowly reversing. The percentage of sales made online fell to 25.3 per cent in January, its lowest since March 2020 although still well above the 19.8 per cent seen in February 2020 before the pandemic.

    Food sales also fell below pre-pandemic levels for the first time.

    “More people returned to eating out and there was also anecdotal evidence suggesting higher demand for takeaways and meal-subscription kits,” ONS statistician Darren Morgan said.

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