UK retail sales Preview: Bargains help retail sales to recover after the worst December in a decade

• Total UK retail sales are expected to rise 0.1% over the month in January following -0.9% monthly slump in sales in the previous month.
• Core UK retail sales are seen rising by 0.2% m/m after falling -1.3% in December.
• Post-Christmas bargain sales and discounts in shops are set to support rising retail sales.

Total UK retail sales are expected to rise 0.1% over the month in January, while retail sales adjusted for the motor fuel sales are expected to increase 0.2% over the month, the Office for National Statistics is expected to report on Friday, February 14 at 8:30 GMT. In December, total UK retail sales fell -0.9% over the month while core sales slumped -1.3% m/m.

When comparing the UK total sales with January 2018, the volume is expected to rise 3.4% y/y and core retail sales are seen rising by 3.0% y/y.

The British Retail Consortium (BRC) retail sales monitor that tracks the performance of the UK retailers on a monthly basis and publishes the report early at the beginning of the month following the reporting period also reported the positive upturn in the UK retail sales in January.

The UK retail sales increased by 2.2% over the year in January compared with an increase of 1.4% in the same month last year, marking the highest growth since June.

“There was a welcome return to growth this month after December’s disappointing sales figures,” BRC chief executive Helen Dickinson said in January report pointing out that the retail 
discounts helped to tempt cautious consumers and there is “no guarantee this momentum will continue after the sales have finished.”

The UK consumers are exposed to a high level of uncertainty that keeps their purchasing decisions at check amid the rising risk of a disruptive no-deal Brexit that could reverse the current economic trends sharply lower.

The KPMG’s head of UK retail Paul Martin complemented with a note that January retail sale improvement came out after the worst December trading performance in a decade underlined by the British shopper’s obsession to hunt for bargains.

“This increase points more to British shoppers’ obsession of bagging a bargain and price inflation, rather than any real improvement, and these peaks and troughs continue to leave retailers feeling increasingly anxious,” Paul Martin noted.