Retail sales improvement ‘just a blip’

Retail sales rose by 0.9 per cent in January compared with December's figures, new data from the Office for National Statistics has revealed.

The report also showed the value of retail sales was 4.4 per cent higher than in January 2011, while sales volumes were up by two per cent.

Such data may seem like good news for the retail sector and could reassure those who have debt and would have significant difficulty paying it back if they were made redundant due to continuing poor trading figures.

However, the figures also showed the improvement in retail sales was driven principally by extensive discounting, a point not lost on the British Retail Consortium (BRC).

BRC director-general Stephen Robertson remarked: "These numbers are slightly better than we would have expected but make it clear that price-cutting by retailers is what's driving any growth in business. Discounting is biting into retailers' margins with non-food businesses facing particularly tough times."

He added that a lack of confidence was putting retailers off expanding and called on the government to introduce favourable measures to boost the sector in the Budget.

And the question of whether the improved figures can be a sign of better things to come has also been posed, with Samuel Tombs from Capital Economics suggesting the increase was clearly down to a 4.8 per cent monthly rise in household goods sales, something he argued "just seemed to be a bounce back after several months of falls".

Mr Tombs commented that unemployment rising, continuing restrictions on credit and an ongoing squeeze on incomes, the retail outlook remains "tough".

People who do lose their jobs – in retail or any other sector – may wish to seek a debt management plan to help spread out their payments.

This can help ensure they can still satisfy creditors and make it easier to make ends meet on a reduced income.

By James Francis