Performance across the retail sector as a whole continued to grow, albeit at a slower rate than in recent months. Sales volume growth is 2.6% higher, but is less than the anticipated 3.9% jump and marks the slowest growth rate in more than a year. The ONS has attributed this slowdown to rising inflation in the wake of the Brexit vote and the subsequent decrease in the value of the pound, and has found that inflation reached 1.8% in the year to January 2017. This is up from a rise of 1.6% in December 2016 and marks the fourth consecutive month of rising prices.
These increases have been driven by mounting fuel prices and, to a lesser extent, food prices, which were unchanged between December and January having fallen the previous year. Clothing and footwear prices however, fell by 4.2% between December and January, partially offsetting these increases.
Last year, retailers largely resisted passing on cost increases to consumers, choosing instead to absorb them in the short term. In addition, the economy’s persistent resilience since the Brexit vote has been largely built on consumers continuing to spend. But economists have long been warning that from 2017 they will no longer be able to do so and the UK economy could be in for a turbulent year as consumer sentiment fades.
The unemployment rate remained steady at 4.8% for the three months to December 2016, with the ONS reporting 31.8 million people as being employed, 37,000 more than July to September 2016 and 302,000 more than one year earlier.
The lack of movement in the level of unemployment may provide some evidence that the labour market is starting to cool off since the Brexit vote. Despite this, experts consider that the employment market remains resilient and employment numbers remain high.
The downward trend in footfall continues, with this month’s figure down 2.7% on last year. The BRC reports that January’s sluggish non-food sales correspond to this decline in shopper numbers. The BRC further reports that overall, retail stores lost out to online shopping and shopping centres bore the brunt of the retail stores’ slowdown.
Bank of England statistics showed unsecured borrowing had increased to £194 billion in January 2017 reflecting year on year growth of just over 7%. The Financial Times has reported that consumers have started to cut back on the high levels of borrowing that helped the UK become the fastest growing economy in the G7, last year.
The average price of UK property remained relatively unchanged in January 2017 at £205,240. Annual growth rate is lower than in December 2016, being 4.3%. However, it is anticipated that there is more likely to be a small rise in house prices, rather than a decline, over the course of 2017.