Food sales drop as spending habits change, Jefferies says

11th Feb 2014 11:21

The UK's retail sector registered healthy growth in January, if the British Retail Consortium's (BRC) latest figures were to be believed.However, the overall survey results masked a sharp underlying shift, as some consumers cut back on their food spend, making way in their budgets to move house, Jefferies wrote on Tuesday.Hence, while retail sales rose by 3.9% in like-for-like (LFL) terms in January, expenditures on 'staples' - such as food - actually declined by 1.9% whilst rising at a clip close to 10% in the non-food category. Further aggravating the above trend for food retailers, inflation was less of a help this time around, with the rate of price increases in the category slipping to 1.5%, versus 1.7% in December. Qualitative commentary around non-food housing related items, on the other hand, seemed to suggest double-digit LFL growth for large ticket items typically linked to lifting housing transactions (bedroom furniture, sofas, white goods, TVs etc), the same broker explained to clients. All of the above did come with one minor caveat however. The figures for the food sector may have been influenced by tough comparables with last year, when snowstorms led to a spike in demand, and likely high levels of clearance for some products in non-food.AB