Consumer spending is “relatively unruffled” despite a tough and uncertain climate, marking a positive start to the year for retailers.
That’s according to the British Retail Consortium, which cited new figures from the Office of National Statistic’s Retail Sales Index showing an uptick sales growth in February.
“These figures are likely to be interpreted as a sign that consumer spending remains relatively unruffled by suggestions that price rises and squeezed real incomes should make them more cautious,” the BRC said.
But the organisation issued a word of caution. As in late 2016, small businesses were a key driver of the pick-up in growth in February returning to double digit growth; with the star performers being small online businesses, growing at over 50%. However, the sample used for small businesses, by the BRC’s estimates, represents just 1% of the small businesses in the UK, although they have a weight of around 20% in the ONS index.
“Given the small sample size and the fact that it changes in a rolling basis, as you would expect there is considerable volatility in these figures. As a result, we should be careful in taking the small business figures as demonstrative of underlying aggregate consumer spending,” the BRC continued.
“Although February is not traditionally a month for shopping, as consumers replenish their finances after Christmas, there are signs that shoppers are thinking more carefully than usual about their spending at the moment as prices start to edge upwards and wage growth slows.”
The BRC expects Easter, which falls next month, will be a “real test” of whether the expected slowdown in consumer spending has arrived.
“Being later should work in retailers’ favour, but we’ll have to wait and see,” the retail organisation said.