Retail sales, Great Britain: January 2018

• In January 2018, the underlying pattern in retail sales, as suggested by the three-month on three-month measure, is one of slow growth with the quantity bought increasing by 0.1%; the lowest growth since April 2017.

• The monthly growth rate for the quantity bought increased by 0.1% with declines across all main sectors except non-food stores.

• When compared with January 2017, the quantity bought in January 2018 increased by 1.6%; a slowdown to year-on-year growth when compared with an increase of 2.4% in January 2017.

• The main contribution to the year-on-year growth came from non-food stores, with sports equipment, games and toys increasing sales in the quantity bought in this sector by 10.9%.

• Feedback from retailers suggested that New Year’s resolutions to “get fit and lose weight” contributed to this increase of sales when compared with the previous year.

• The year-on-year growth rate for quantity bought in food stores showed a decline for the sixth consecutive month at negative 0.9%, due largely to a continued rise in food store prices.

Commenting on today’s official retail figures, Rhian Murphy, Office for National Statistics Senior Statistician said:

“Retail sales growth was broadly flat at the beginning of the New Year with the longer-term picture showing a continued slowdown in the sector. This can partly be attributed to a background of generally rising prices.

“Growth in the quantity of sporting equipment, games and toys being bought was offset by falling food sales when compared with the same month a year earlier.

“Sporting equipment sales have grown more than usual in January 2018, following an increased uptake for gym wear.”

This bulletin presents estimates of the quantity bought (volume) and amount spent (value) in the retail industry for the period 31 December 2017 to 27 January 2018.

Unless otherwise stated, the estimates in this release are seasonally adjusted.

The Retail Sales Index (RSI) measures the value and volume of retail sales in Great Britain on a monthly basis. Data are collected from businesses in the retail industry and the survey’s results are used to produce seasonally adjusted monthly, quarterly and annual estimates of output in the retail industry at current price and at chained volume measures (removing the effect of inflation). Unless otherwise stated, all estimates included in this release are based on seasonally adjusted data.

The RSI is an important economic indicator and one of the earliest short-term measures of economic activity. It is used in the compilation of the national accounts and widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty’s Treasury to assist in informed decision- and policy-making.

Summary information can be found in the RSI Quality and Methodology Information report.

In January 2018, estimates for the quantity bought (volume) increased by 0.1% whilst the amount spent (value) remained flat when compared with the previous month (Table 1).

Showing a similar picture of slow growth in the three-month on three-month movement, the quantity bought increased by 0.1%; the lowest growth since April 2017.

When compared with a year earlier, the picture appears to show one of stronger growth, as the quantity bought increased by 1.6% while the amount spent grew by 4.4%. However, this year-on-year growth has slowed when compared with earlier months, as explained by the longer-term picture (Figure 1).

Figure 1 shows the year-on-year growth rates for the quantity bought in all retailing, food and non-food stores from January 2016 to January 2018. The majority of money is spent in food and non-food stores (Figure 2) as the main contributors to movements in all retailing.

Despite some volatility in the series, Figure 1 shows that year-on-year growths for all three series were generally higher throughout 2016, reaching 7.3% for all retailing in October 2016. A sharp decrease in growth followed, with five consecutive months of year-on-year slowdown to growth in total retail sales. With short periods of recovery, a general downward trend in growth continued to the end of 2017.

In January 2018, growth in food stores fell by 0.9%, contributing to the slowdown in all retailing year-on-year. The growth of 2.6% in non-food stores more than compensated for this fall, as the overall growth in total retail sales increased by 1.6%.

The retail industry is divided into four main store types:

• predominantly food stores (for example, supermarkets, specialist food stores and sales of alcoholic drinks and tobacco)

• predominantly non-food stores (for example, department stores, textile, clothing and footwear stores, household goods stores and other stores)

• non-store retailing (for example, mail order, stores that sell predominantly online, catalogues and market stalls)

• stores selling automotive fuel (petrol stations)

Figure 2 shows that for every British pound spent in the retail industry:

• 40 pence was spent in food stores

• 42 pence was spent in non-food stores

• 9 pence was spent in non-store retailing

• 9 pence was spent in petrol stations

Using these proportions as weights we can calculate the contribution that each store type has on the month-on-month and year-on-year estimates for January 2018 (Figures 3 and 4).

Figure 3 shows that in January 2018, non-food stores were the only main sector to show an increase in contributions to the overall growth for both the quantity bought and amount spent when compared with December 2017; up 0.4 and 0.5 percentage points respectively.

Food stores reported the largest decrease in contributions to the quantity bought at negative 0.2 percentage points. This, along with a decrease of 0.1 percentage points in petrol stations, highlights that purchases of non-essential items were the main contributor to the 0.1% growth in this period.

The amount spent by consumers remained flat on the month as declines in food and non-store retailing were offset by growth in non-food stores.

Figure 4 shows year-on-year growth in the retail sector for both the amount spent and quantity bought, at 4.3 and 1.6 percentage points respectively.

The main contribution to growth came from non-food stores, providing a positive contribution of 2.1 percentage points in the amount spent and 1.1 percentage points in the quantity bought.

The only negative contribution to year-on-year growth in the quantity bought came from food stores at negative 0.4 percentage points, while the amount spent increased by 0.9 percentage points; a direct consequence of continued rising store prices (Figure 5).

In January 2018, we saw a decline in the quantity bought in food stores, while more goods were bought in non-food stores when compared with both the previous month and the previous year.

Food stores

Figure 5 shows that with declining food store prices seen at the beginning of the series, the quantity of goods bought in food stores continued to grow at a good rate. However, as prices began to rise, the picture changed to one of continued slowdown in growth, experiencing the first year-on-year decline in growth in 34 months in June 2017. As food store prices increased for the 13th consecutive month in January 2018, a reduction of 0.9% was seen in the quantity bought, contributing to the slowdown in the overall year-on-year growth rate of 1.6%.

Non-food stores

Non-food stores contributed 1.1 percentage points (Figure 4) to the overall growth of 1.6% in the quantity bought for January 2018.

Non-food stores had the largest weight in total retail sales, with 42 pence in every British pound spent in this sector (Table 2).

Table 2 shows the year-on-year growth for the quantity of goods bought in each store type within non-food stores, along with their respective weights.

In January 2018, each store type, with the exception of household goods stores, increased in comparison with January 2017, resulting in the overall growth of 2.6% for non-food stores.

The year-on-year growth of 2.8% in the quantity bought within department stores could be attributed to the slowdown in the growth of prices at 1.7% within this sector; the lowest price increase when compared with other sectors due to the uptake of January sales.

Other stores displayed the greatest growth within non-food stores at 6.7%. This, along with its largest weighting within non-food stores, provided the highest contribution to the year-on-year growth in non-food stores.

Other non-food stores includes a range of store types including pharmaceutical, medical, cosmetic and toilet articles, watches and jewellery, telecommunications equipment and second-hand goods. Figure 6 shows the contribution of each store type within other non-food stores to the total year-on-year change in the quantity bought.

In January 2018, other non-food stores contributed 0.88 percentage points to the overall year-on-year growth of 1.6% in retail sales. While all sectors except books, newspapers and periodicals, along with medical goods, showed a positive contribution, the largest contribution came from sports equipment, games and toys at 0.26 percentage points. Feedback from retailers indicated that New Year’s resolutions to “get fit and lose weight” contributed to the increase of sales within sporting equipment. These sales are expected in the month of January, however, stronger growth was seen in January 2018 when compared with January 2017.

Internet sales saw a decrease in its proportion of all seasonally adjusted retailing in January 2018 when compared with December 2017; accounting for 16.5% (Table 3) of all retail. This was, however, an increase on the January 2017 figure of 15.8%.

The year-on-year increase of 9.1% in total online retailing continues the pattern of growth but at a much slower pace than previous years; January 2017 increased by 19.2%. All four main sectors reported year-on-year growth in January 2018, with non-food stores reporting the largest growth of 12.8%; household goods stores showed the largest monthly growth within this sector at 25.2%.

Average weekly spending online decreased in January 2018 to £1,175.4 million compared with the £1,209.6 million reported in December 2017. The underlying trend, however, is one of continued growth but at a slower rate than previously witnessed (Figure 7).

The only international estimate of retail sales available for January 2018 was published by the US Census Bureau on 14 February 2018. In its advanced monthly sales for retail and food services, January 2018 they include the amount spent in the US retail industry, including motor vehicles and parts, and food services.

Eurostat also published their latest estimates of the volume of retail trade across the European Union on 5 February 2018 for December 2017. This shows the seasonally adjusted volume of retail trade in both the euro area (EA19) and EU28 when compared with November 2017.

Data for Northern Ireland are published by the Northern Ireland Statistics and Research Agency (NISRA).

It should be noted that accurate comparisons cannot be made against these or other international statistics due to a variety of reasons, including differences in methodology.

Our Monthly Business Survey (MBS) for retail sales measures output from the retail industry in Great Britain. It samples 5,000 businesses, with all businesses employing over 100 people or with an annual turnover of more than £60 million receiving an online questionnaire every month.

Further qualitative data or information and summary tables can be found in the attached datasets. This includes data on:

• response rates

• standard errors

• revision triangle

• distribution analysis

The Retail sales Quality and Methodology Information report contains important information on:

• the strengths and limitations of the data and how it compares with related data

• uses and users of the data

• how the output was created

• the quality of the output including the accuracy of the data

We will be incorporating the 2017 index category weights for the February 2018 estimates, to be published on 22 March 2018.

The Office for National Statistics (ONS) will publish an article alongside February’s release on the methodological differences with our main external source for comparison, the British Retail Consortium (BRC).