Retail sales rose for the first time in eight months in January as consumers took advantage of heavy discounting in the early part of the new year, according latest data from the British Retail Consortium (BRC). Retail sales values rose 1.1% on a like-for-like basis, and 3.2% on a total basis, from January 2008. By both measures, this was the best performance since May last when, when sunny weather had boosted sales.

Food helped boost overall sales, rising 5.6%, compared with a 3.1% increase in December, as consumers continued to spend on essential items. But the bigger change came in non-food sales, which saw only a 1.6% drop, after falling by 7.9% in December. The overall trend for retail sales has been markedly downwards over the last year, and the BRC said it is likely the increase in non-food sales was driven by discounting. Non-food non-store sales in January were 19.2% higher than a year ago. This was weaker than the 30.0% gain in December, when people increasingly used the internet for their Christmas shopping.

Stephen Robertson, Director General of the BRC said: “These surprisingly good figures give some room for optimism. Overall sales growth turned positive and is higher than it's been since last May. Food sales growth rose. Non-food sales fell more slowly suggesting January clearance deals released pent-up demand and customers started to spend on goods they’ve been intending to buy for months.

“But the fundamentals haven't changed. Job fears are mounting. Consumer confidence is at record lows. It remains to be seen whether January’s discount driven growth was just a blip.”

Helen Dickinson, Head of Retail at KPMG, added: "Following three months' year-on-year declines in the total value of retail sales and seven months of declines in like-for-like sales, this appears to be significantly better but the figures don’t mean consumer confidence has returned. The results are heavily skewed by food prices creeping back up again after the heavy promotional activity in December and by a reasonably strong performance in the first week of the month, caused by the continuation of a short-lived pick up in spending immediately after Christmas which ended by the second week. The divergence in the non-food sectors between those that are doing well and those that are not, continues to grow, meaning the outlook for many retailers, and the industry as a whole, remains challenging."

Meanwhile, commenting on the food & drink sector, Joanne Denney-Finch, Chief Executive of IGD said: “Food and drink is holding up well, suggesting an industry that is recession-resistant. It is also highly adaptable and very much in tune with its shoppers, tailoring product offers to their changing needs.

“IGD consumer research demonstrates that shoppers are increasingly price sensitive, with 36% mentioning price as a main driver of product choice today, compared with 29% this time last year.

“But while they are shopping around for the best value, they are not, in general, letting the recession get in the way of enjoying the high standard of food and drink they consume at home. Support for ethical shopping - for example free-range, Fairtrade and local foods - continues to grow. Animal welfare, in particular, is high on shoppers’ agendas with one in five (20%) looking for high standards, compared with one in eight (13%) a year ago”. (source:Namnews)