Shops not seeing benefits of low inflation
Cut taxes for low paid to give high street a boost, says retail champion
Mr Lonsdale, director of the Scottish Retail Consortium, said measures are needed to boost disposable incomes to give consumers greater encouragement to spend.
His comments follow new follow publication of SRC figures showing sales slumped in January by 2.3% against a 4.3% rise in the same month last year. While the decline is attributed partly to poor weather, there is concern that lower inflation is not finding its way into shop tills.
Mr Lonsdale, said: “The total value of Scottish retail sales slipped back last month, however this needs to be seen in the context of a bumper performance in the corresponding period last year.
“While sales of food edged down, it was nonetheless the best performing category – for the first time in four months – and recorded its best performance since last June. Non-food related sales eased back after a stellar performance in the same period in 2014, making for a pretty flat past quarter in the category once inflation is taken into account.
“Looking forward, retailers will be heartened by the Bank of England’s predictions of continued low inflation being outstripped by average pay rises. The Chancellor should seek to bolster this in his Budget next month with policies which stimulate retailers to invest and which boost disposable incomes such as reducing income taxes on low earners.”
David McCorquodale, Head of Retail at KPMG, said 2015 got off to a” difficult start” for Scottish retailers. “Whilst the decline may be partly explained by more inclement weather this year and January being a strong month for sales last year, it is clear that the considerable saving felt by consumers in petrol and fuel bills is not finding its way to the High Street’s tills.
“The grocery sector was the best performer in Scotland: while sales are still declining there is evidence that the rate of decline has reversed. It may be some time till we herald growth again in this competitive market, which is also buffeted by price deflation, but the grocers will take heart that the worst may be in the past.”
He said Scottish retailers will be hoping for wage rate inflation to spread to the rest of the UK.
“With three more months of electoral campaigns ahead, retailers will wish to see some resolution to political uncertainty feed into consumer confidence.”