UK retail sales growth grinds to a halt in February

As January sales end, retailers struggle to keep shoppers spending this month, CBI says

British retailers suffered a sharp slowdown this month with business falling at supermarkets and department stores as January sales drew to a close, according to a business survey.

The latest snapshot of retailers from business group, the CBI, showed sales barely rose on a year ago, a much worse performance than City economists and retailers themselves had been expecting. Echoing other signs of pressure on retailers as they resort to discounting to attract consumers, the survey showed prices and headcount falling.

After a strong start to the year, retailers were disappointed by the unexpected halt in sales growth. In particular, continually heavy discounting in the grocers sector seems to be weighing on activity.

Looking ahead, the outlook for the retail sector is fairly positive, with the boost to household incomes from falling inflation likely to support spending ... However, as this survey shows, overall trading conditions on the high street remain challenging."

There is no getting away from the fact that CBI's distributive trades survey for February is substantially weaker than expected. Even so, we suspect it is primarily a case of consumers taking a breather after spending at a robust rate through the fourth quarter...

Despite the disappointing February CBI survey, the prospects for retail sales and consumer spending overall for 2015 still look largely bright. Households purchasing power is currently getting a double leg up from extremely low inflation as well as rising earnings growth. And there should be more improvement in purchasing power to come over the coming months, along with further rises in employment."