Instant View - UK retail sales post surprise fall in January

LONDON (Reuters) - British retail sales posted a surprise fall in January as unusually snowy weather hurt food stores in particular, data showed on Friday.

ANALYSTS' VIEWS

PHILIP SHAW, INVESTEC

"This could well be a snow story, but it does run contrary to a more buoyant BRC (British Retail Consortium) survey. Markets and policymakers all know that the numbers are volatile and unreliable at this time of year but I'd rather be explaining away a period of volatile strength ... than numbers like these."

"We have seen a weakening in retail sales figures in recent months, which is curious given that official data actually shows that the real income background has been relatively buoyant."

RICHARD LOWE, HEAD OF RETAIL & WHOLESALE SECTOR, BARCLAYS

"While snow slowed sales on the physical high street, larger retailers were able to stave off falls in footfall with strong virtual traffic as shoppers avoided the bad weather conditions. I expect this trend to continue as retailers feed consumers' growing need for convenience and carry on investing in their online offerings."

DAVID TINSLEY, BNP PARIBAS

"It looks like it's genuinely erratic weakness rather than anything to signal an underlying weakening. It very much sounds as though, being located in food and in smaller retail stores, it's very connected to the weather. It does raise the risk marginally of a contraction in Q1 in GDP terms but there's a lot of other data to come before we can judge that too clearly.

"Inflation was, albeit at the high annual rate, relatively benign on the month so I don't think it played a big part.

"It does genuinely sound as though it's a shock erratic factor that's doing that, which does mean because it's happened in January you can get some catch-back in February and March.

"So it shouldn't necessarily have too much implication for overall Q1, so I wouldn't over-egg the triple dip side of it. If that weakness got reflected in the broader service sector output then that would be more worrying for January."

JENS LARSEN, RBC

"You have to be careful here. There is never a lot of signal in retail sales for consumption demand, and here we have to be particularly careful because of the weather effect.

"But it does look a surprisingly weak number and not all of it can be a weather effect. There is no escaping that this is a weak start to Q1."

AMIT KARA, UBS

"The numbers are clearly disappointing and in part that's because of the snow. But I think if we look through the month-on-month variations, the picture is quite dismal.

"That said, our judgment is that this year will be a modestly better year for the consumer. But again there are huge risks on either side, primarily depending on the evolution on oil and commodity prices more generally."

ROB WOOD, BERENBERG BANK

"This probably brings the question of triple dip back on the table again. If this is the sort of disruption we see from snow, and it's reflected in output in the rest of the economy, then it could be bad news for Q1."

GEORGE BUCKLEY, DEUTSCHE BANK:

"It shows that what we've seen over the Christmas period has been very weak. Not only did we have a fall in the pre-Christmas period but we saw a fall in the January sales as well. And when we look at the overall numbers for Christmas - we tend to look at between November and January - they've been exceptionally weak. We didn't see anything big in November and we've seen two declines thereafter.

"So I think they're disappointing. One of the reasons might be because inflation has picked up and that might mean that volumes of sales have been weaker. Inflation picking up has probably been one of the main reasons why that has come down."

KEY POINTS

- Biggest yearly fall in overall retail sales volumes since April 2012

- Biggest 3m/3m fall in retail sales since March 2010

- Largest monthly fall in food sales since May 2011

- Largest yearly fall in food sales since April 2012

(Reporting by UK economics team)

Source: http://news.yahoo.com/instant-view-uk-retail-sales-post-surprise-fall-094524899--business.html

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