UK shoppers return to stores after Omicron knock

LONDON, Feb 18 (BUS) – British shoppers began returning to stores last month after many of them walked away during the wave of COVID-19 cases that peaked at the start of the year, even as rapidly rising inflation limits their ability to spend.

According to Reuters, retail sales volumes rose 1.9% in January after falling 4.0% in December, the Office for National Statistics reported, the largest rise since the relaxation of lockdown rules for non-essential stores in England in April 2021.

The monthly increase was larger than the average gain of 1.0% in a Reuters poll, although the December sales decline was slightly larger than initially expected.

The broader British economy contracted 0.2% in December, according to a preliminary estimate last week.

“The strong rise in retail volumes in January adds to indications that activity from Omicron is smaller and shorter-lived than previously thought. However, the cost-of-living crisis means the outlook for retailers is not bright,” said Adam Howes, economist at Capital Economics.

Households are facing a rapid rise in consumer price inflation, which reached its highest level in nearly 30 years in January at 5.5%, and the Bank of England expects to peak above 7% in April.

The separate inflation measure used to calculate retail sales data for January rose to 6.7%, the highest level since that data began in 1997.

Rapidly rising energy and food prices are leaving consumers with less spare cash to spend on essentials, and 2022 looks set to bring the biggest squeeze on household disposable income in 30 years.

January sales volumes were 9.1% higher than a year earlier, when non-essential stores were closed due to lockdown restrictions, and 3.6% higher than pre-pandemic levels.

The British retail sector as a whole has been relatively resilient during the COVID-19 pandemic, with sales exceeding January 2020 levels in July 2020, thanks to a major shift to online shopping.

However, some retailers, especially clothing stores with a sparse online presence, have found it more difficult to recover from the frequent shutdowns.

Apparel and footwear sales fell 5.0% in January — which the Office for National Statistics said could come down to smaller-than-normal cuts in seasonal sales — 13% below pre-pandemic levels.

Some epidemic trends have been slowly reversing. The percentage of online sales fell to 25.3% in January, the lowest level since March 2020 although still well above the 19.8% seen in February 2020 before the pandemic.

Food sales have fallen below pre-pandemic levels for the first time.

“More people are returning to eat out and there is also anecdotal evidence to suggest a high demand for takeaway and share-meal groups,” said ONS statistician Darren Morgan.

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