MNI DATA PREVIEW: UK February Retail Sales Seen Lackluster

By Shaily Mittal

     LONDON (MNI) - UK retail sales are expected to slow in February after a

positive January, as ongoing uncertainty over Brexit dampened shopping spirits

-- although warmer than usual weather in the month could somewhat ease the

slowdown.

     Table 1: UK Retail Sales - February

           Sales Inc Fuel %  Sales Inc Fuel %  Sales Ex Fuel %   Sales Ex Fuel %

                        m/m               y/y              m/m               y/y

--------------------------------------------------------------------------------

Prior-Jan               1.0               4.2              1.2               4.1

MNI Cons               -0.3               3.3             -0.4               3.4

Bbg Cons               -0.4               3.3             -0.4               3.5

     Mostly Positive Surprises in February: Since 2010, there have been seven

upside surprises and two downward surprises in February with no downside

surprises in the last four years. Despite an average positive surprise for

February of 0.456pp, concerns of a negative surprise are understandable, given

recent weak survey evidence.

     Price Cuts and Discounts Aiding Sales: Since 2018, the implied price

deflator has been trending lower. In January, the deflator was up just 0.4% y/y

- it's lowest reading since November 2016. The Textile and Footwear sector has

seen the most aggressive price cuts, with the deflator turning increasingly

negative over the last five months. Food stores is the only sector showing a

certain degree of resilience to price changes amid upwardly trending sales,

suggesting that consumers are more price conscious in their discretionary

spending but pushing ahead with necessity spending.

     BRC-KPMG Retail Sales Moderate in February: The BRC-KPMG survey showed

total sales eased to 0.5% in February from 2.2% in January, coming in below the

respective three-month and 12-month averages.

     The non-food sector was hit harder with consumers less enthusiastic in

recent months, reflecting the official data. Online sales, in contrast,

maintained their upward trend.

     VISA Spending Still Subdued: Overall VISA spending fell 1.8% y/y in

February for a fifth consecutive decline and the largest since April last year.

Transport and Communication was the worst performing sector, closely followed by

Clothing and Footwear. (Please note that the VISA data is not seasonally

adjusted).

--MNI London Bureau; tel: +44 203-586-2224; email: shaily.mittal@mni-indicators.com