January sales expectations surpassed by UK retailers

A sharp decline in the petrol price improved disposable incomes and this boosted the spending levels of consumers after the Christmas sales.

The survey indicated that half of the stores saw an increase, with only around 10% reporting a decline. This boosted the index to +39%, compared to an expectation of 35%.

The highest increases were among food, furniture and clothing retailers, whilst DIY and sports gear retailers saw a decline. Clothing reached a 23-month high during this period. According to analysts, prices were maintained due to strong competition among retailers and the change in weather boosted sales of warmer clothing.

The director of economics at CBI, Rain Newton-Smith, said the decline in oil prices and lower inflation rates will result in consumers having more expendable cash and this could boost sales growth.

The only dark cloud on the horizon was that many retailers reduced orders with their suppliers. Although the figure between the reduction and increase of supplier orders was below expectations, the CBI is expecting an increase over the next month.

The high possibility that interest rates will not increase until 2016, along with low inflation, should boost the purchasing power of consumers during 2015.