Consumer spending ‘unruffled’ by recent uncertainty

BATH, ENGLAND - DECEMBER 18:  Shoppers look for Christmas gifts in a high street jewellery store on December 18, 2014 in Bath, England. With less than a week until Christmas, traditional high street retailers already under pressure from online shopping, will be hoping that the retail sales boost generated by Black Friday will continue.  (Photo by Matt Cardy/Getty Images)

Consumer spending is “relatively unruffled” in spite of a tough and uncertain climate, marking a positive start to the year for jewellery retailers.

That’s according to the British Retail Consortium, which cited new figures from the ONS’s Retail Sales index showing a pick-up in growth of the value of sales from January – 4% up on last year.

This however, is far from the level seen in the ONS pre-Christmas boom where retailers saw year-on-year growth rates of 7%.

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In spite of suggestions that price rises and squeezed real incomes should make consumers more cautious, the first few months of 2017 have been positive for jewellery retailers.

The BRC however, warned that care has to be taken. Small businesses were a key driver of the pick-up in growth in February 2016 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 index.

Given the small sample size and the fact that it changes in a rolling basis, there is considerable volatility in these figures. As a result, the BRC warns retailers should be careful in taking the small business figures as demonstrative of underlying aggregate consumer spending.

The BRC said: “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.

“However, Easter, which falls in April this year, will be the 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.”

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