Wet weather doesn’t dampen outlook for spending

The official UK retail sales figures once again painted a different picture of high-street spending to anecdotal and survey evidence – this time indicating a far weaker month for retail sales in December. Despite retailers’ best efforts to draw in shoppers with intense discounting, part of the weakness can be attributed to unseasonably-warm and -wet weather dampening consumers’ appetite for spending on the high-street. However, weather can not be entirely to blame – online sales fell on the month too. But given that the economic drivers of spending remain strong, there is still a good chance that retail sales will enjoy a stronger January clearance period. Beyond January, while retailers must face burgeoning import cost pressures as well as the introduction of the National Living Wage, we expect solid real income growth to prevent any marked easing in consumer spending growth.