The BRC-KPMG Retail Sales Monitor has shown that retail sales increased by 4.2% in January – half of the 11.9% rise in January 2022.
The increase was above the 12-month average of 2.5%, but fell below the three-month average of 5.2%. Like for like sales increased by 3.9% during the month, compared with 11.9% in the same month in 2022.
Non-food item sales went up by 7.2%, and 6.5% on a like-for-like basis over the three months to January 2023.
Chief executive of the British Retail Consortium, Helen Dickinson, commented: “As Christmas cheer subsided, retailers felt the January blues as sales growth slowed. Many retailers discounted heavily to entice customer spend and, while there were bargains to be had in the January sales, retailers continue to be hit by lower margins and falling volumes.
“The coming months will continue to be challenging for retailers and their customers. Consumer confidence remains stubbornly low and looming rises in household bills and mortgage mean discretionary spending will remain weak.”
Paul Martin, UK head of retail, KPMG, added: “With inflation running at around 10%, sales growth for January nearly halved in comparison to December to just over 4% – sending a clear signal that consumers have started the year with a tight rein on spending as they face another period of rising costs.
“As we head into a difficult time for consumers, the short-term outlook for the retail sector remains challenging. With the latest interest rate rise and utility price increases heading our way, shrinking household incomes means we will continue to see a shift in what consumers buy and where they buy from.
“Retailers face a tightrope as their costs rise and margins are squeezed, whilst at the same time having to ensure affordability and value for customers. Although retailers have demonstrated resilience over recent years, it is likely we will continue to see casualties both online and on the high street this year.
“Those retailers that have emerged from the pandemic in good shape will benefit from the current situation through market-share growth and consolidation opportunities, but all retailers are facing a tough few months of falling consumer spending in real terms.”
