Spending on the UK’s high streets bounced back in January after December’s sales were hit by heavy snow, it will be revealed today.
The news comes after the FTSE jumped 53.65 points yesterday – a rise of 0.89 per cent – breaking through the confidence-boosting 6,000 mark to close at 6,051.03.
Retail sales were up 2.3 per cent on a like-for-like basis from January 2010, when sales had fallen 0.7 per cent, according to the British Retail Consortium (BRC) which released its findings today. Total sales were 4.2 per cent higher, against a 1.2 per cent increase in January 2010.
“Pent up demand after December’s snow” was a factor behind the boom, the BRC said. In December annualised total sales increased by a modest 1.5 per cent, while “like-for-like” sales – which ignore shop floor expansion – fell by 0.3 per cent.
The BRC played down January’s uptick, partly attributing it to a rush at the beginning of the month to avoid the 2.5 per cent hike in VAT.
And it warned the government against any further squeeze on consumers. “A range of pressures is bearing down on customers,” said BRC director general Stephen Robertson. “As it considers the budget, the government must not add any more cuts.”
A series of positive economic releases, combined with rising inflation, has increased the chance of the Bank of England raising interest rates this Thursday, observers said. While an actual hike would still come as a shock, there is a near-certainty of an increase by May at the latest, according to economists.
UK gilt yields rose yesterday, with 10-year gilt yields reaching a nine-month high of 3.868 per cent, as investors considered the risk of a hike in rates.
Meanwhile, the global economic recovery continued apace, with world equities approaching a 29-month high, and copper – seen as a bellwether of economic activity – reaching $10,121 (£6,268) a tonne in London. European shares rose to their highest close since September 2008. The pan-European FTSEurofirst 300 index of top shares closed up one per cent at 1,176.81 points.
“Moving on from where it left off last week, I think the equity markets are focusing on the growth that is out there and are being supported by strong earnings,” said Mike Lenhoff of Brewin Dolphin. The Dow Jones and S&P 500 jumped to their highest levels since June 2008 yesterday, driven upwards by a wave of merger news and solid earnings.