The seasonally adjusted value of retail sales in January 2011 rose by 8.2 per cent compared with January 2010 and the seasonally adjusted volume of retail sales in January 2011 rose by 5.3 compared with January 2010. It’s a retail boom or is it?
Too hot, too cold,
Too wet, too dry,
This is why my sales won’t fly.
Christmas too early, Easter too late,
Missed sales targets that’s my fate.
This is an old retail mantra to explain retail sales. I have always found this to be extremely useful in scientific retail analysis.
This January sales are booming in comparison with 2010 because compared to last year, there is just not enough snow. Sales are up by over 5% in volume terms but this is against a snow bound comparison, when sales actually fell last year by three per cent.
There is no boom, the underlying trend rate of growth in January is around 1%. Sales were hit last year by snow and an increase in VAT from 15% to 17.5%. This year sales have been hit by light rain and the VAT increase from 17.5% to 20%.
Non food stores are up by 9.5% and household goods stores experienced sales growth of 9.8%. The large increases occur because of the weak figures last year rather that an illogical response to VAT rise and the sluggish housing market. Sector sales offer little assistance to understanding what is happening within the economy.
On line sales increased by 22% and now account for 10% of total retail sales. In sectors such as books and DVDs the figures must be heading for 50%.
What is happening to food? Britain isn’t eating according to the official figures. Consumers having emptied the freezer in December must have started eating each other in January as sales fell by a further 2.7%. I love data and I love the ONS but something is happening to the numbers. Can it be that more and more food sales are going on line.
The Governor of the Bank of England will love the ONS too. Retail prices increased by an estimated 2.7% in January compared to the horrible headline CPI 4%. Using the CPI - ONS data, he wouldn't have had to write a letter to the Chancellor.
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The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines or reflect political bias. UK Economics news and analysis : no politics, no dogma, no polemics, just facts. JKA is a visiting professor at MMU Business School, an economist and specialist in Corporate Strategy, educated at LSE, London Business School with a PhD from Manchester Metropolitan University.
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