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UK retail sales rebound as shoppers snap up clothing and footwear | Business

Retail sales rebounded last month as consumers flocked to buy discounted clothing and footwear, giving the high street a welcome boost after a dire 2019.

The Office for National Statistics said sales increased on average across the high street and online by 0.9%, reversing a 0.6% decline during December.

Drawing a line under the worst year on record for retail sales in 2019, the value of goods bought also increased after the amount spent rose by 1.2%.

Analysts said the increase was even more impressive as the figure included a 5.7% month-to-month drop in petrol and diesel sales – the biggest since March 2015 – which was driven by higher fuel prices and bad weather.

The latest official barometer of high street and online sales is expected to persuade any wavering members of the Bank of England’s interest rate-setting committee against voting for a cut in the cost of borrowing.

Two members of the Bank’s monetary policy committee voted for an interest rate cut in January to boost the economy but are not expected to repeat their demand at the next meeting in March.

The January increase in retail sales failed to reverse steep declines at the end of last year. The ONS said a measure of sales volumes during the three months to January was down 0.8% compared with the three months to the end of October last year. The amount spent in retail fell during the period to January by 0.5% when compared with the previous three months.

Thousands of stores have closed or been left empty across the country over the last 18 months in response to increasing sales over the internet and Brexit uncertainty. The harsh economics of bricks and mortar retailing has also led to tens of thousands of job losses across the sector.

Last year was the worst on record for British retail, with sales falling for the first time in 24 years as a dire performance on the high street dragged down the industry. A study by the British Retail Consortium (BRC) and accounting and consultancy firm KPMG found total sales slipped by 0.1% in 2019, the first fall since they began monitoring the sector in 1995.

Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said the rise in January sales confirmed that “the decisive general election has released the handbrake of political uncertainty on consumers’ spending”.

He said: “Fuel store sales should recover soon, given that oil prices have fallen back since January, though the recent storms might prevent demand recovering as soon as February.

“Looking ahead, the outlook for growth in households’ disposable incomes remains bright. CPI inflation looks set to hover about 1.5% over the next six months, thanks to falls in energy and import prices.

“Hiring indicators have picked up since the election, while more workers than in previous years will benefit from April’s 6.2% increase in the national living wage.

“Meanwhile, the government’s plans for a big increase in the threshold for national insurance contributions will boost households’ disposable incomes by 0.2% in April, while benefit payments are set to rise in April in line with inflation for the first time since 2015,” he said.

The return of consumer spending contrasted with the ongoing difficulties of the manufacturing sector, where output fell in the three months to February at a slightly slower pace than in the quarter ending in January, according to a survey of the sector released on Thursday by business lobby group the CBI.

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The CBI said that while there was a more buoyant outlook after orders hit a six-month high in February, the reading remained well below the survey’s long-run average.

The monthly manufacturing orders balance, which offsets the number of companies saying orders have risen against those that say they fell, rose to -18 in February from -22 in January. The survey’s long-run average is -13.

Manufacturing spent most of last year in recession as Brexit uncertainty undermined business confidence and deterred firms from making investments. Official data showed manufacturing output contracted by 1.5% in 2019 and analysts believe it could take more than a year for output to fully recover.

“It is encouraging to see manufacturers reporting some early signs of a turnaround in activity, but it’s probably still too early to say whether we’ve seen the end of the slowdown in the sector,” said Alpesh Paleja, the CBI’s lead economist.

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