Retail sales fell in January, says a closely watched survey.
UK retail sales fell by 0.6 per cent in January, compared to the month before. That was after seeing a one per cent growth rate in December, according to the latest BRC/KPMG Retail Monitor.
The findings chime with the latest retail report form the CBI.
Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics said that a "a fundamental slowdown in consumer spending now is underway."
Non-food sales is the big problem, which saw the slowest growth rate since 2011 in the three months to January, unlike food sales which are still seeing strong growth.
Much depends on what wages do next.
We know that inflation is set to rise this year. But at the last count, wages were still rising faster than prices, up 2.8 per cent in January, when inflation was just 1.2 per cent. But inflation is expected to hit three per cent soon, and not many expect wages to carry on growing at the 2.8 per cent pace.
If inflation does indeed rise faster than wages, retail spending may well be the main victim.
Richard Lim, Chief Executive, Retail Economics said: "Retailers reported feeble sales growth for January as signs of squeezed disposable incomes are beginning to materialise.
"There are also growing concerns that spending has become increasingly debt-fuelled. Indeed, unsecured lending is growing at the fastest pace since the financial crisis. What’s more, our research shows that ‘repayment of debt’ is one of the biggest concerns for consumers heading into 2017. For many households, the prospect of tighter personal finances will soon become a reality which will filter through to weaker discretionary spending.
"The winners this year will be those retailers who provide a seamless omnichannel proposition, who execute click-and-collect conveniently for their customers and embrace the continued shift towards online retailing. For others, 2017 is set to be a very challenging year."
