‘Lacklustre’ January for retailers with bad weather and cost of living pressures blamed
Retailers suffered a “lacklustre” January as bad weather and cost of living pressures discouraged shoppers from opening their wallets after Christmas, according to new research.
Total retail sales across the UK increased by only 1.2% year-on-year in January – down sharply from growth of 4.2% during the same period last year, figures from the British Retail Consortium (BRC) and KPMG said.
Separate figures from Barclaycard also found year-on-year consumer card spending grew by just 3.1% over the same month.
It blamed the recent cold weather – including from Storm Isha and Storm Jocelyn – for putting off shoppers from visiting high streets, and claimed Britons were instead “embracing nights in” by watching TV hits such as The Traitors.
The BRC said January sales discounting helped boost spending in the first two weeks of the post-Christmas period, but added the trend was “not sustain[ed] throughout the month”.
Chief executive Helen Dickinson said: “Larger purchases, such as furniture, household appliances, and electricals, remained weak as the higher cost of living continued into its third year.”
Clothing and footwear sales also performed poorly, although there was an upward trend for health and beauty products, she added.
Linda Ellett, KPMG’s UK head of consumer markets, leisure and retail, described the high street’s performance as “lacklustre” and said the “feel-good factor” from falling mortgage rates and easing inflation had yet to materialise at the tills.
She said: “It may be a new year, but the hangover of low consumer confidence remains.
“The extraordinary weather conditions across large parts of the country did little to encourage shoppers out on to the high street, whilst continued industrial action on the rail network was unhelpful for city centre locations.”
It comes after official figures showed a shock fall in retail sales during the key December shopping period, despite some positive reports by major high street outfits in the run-up to Christmas.
Shelter from the storms
Barclaycard said its below-inflation growth figures suggested “Brits stayed at home to shelter from the cold weather and save money after a busy festive period”.
It said spending on takeaways and fast food was up 5.5% year-on-year in January, with people spending £55 each on average, while household expenses on digital content and subscriptions increased by 11.4%.
Nearly half of 2,000 consumers polled on behalf of Barclaycard said they were using loyalty schemes or vouchers to get money off shopping, while 43% said they plan to cut down on non-essential spending due to rising bills.
But the poll also found 70% have confidence in their household finances – the highest level in its monthly survey since November 2021.
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Karen Johnson, head of retail at Barclays, said: “Brits took on a more frugal approach in January, choosing to stay at home more often to save money and shelter from the winter weather.
“This meant that online retail performed strongly, as shoppers browsed the sales from the comfort of their sofas, while demand for digital content and takeaways remained robust, boosted by the release of popular new film and TV releases such as The Traitors and Fool Me Once.
“While this shift in behaviour resulted in subdued growth for hospitality and leisure, it’s encouraging that confidence is improving, with consumers remaining resilient and finding savvy ways to manage their finances.”
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Jack Meaning, chief UK economist at Barclays, added: “Increasing consumer confidence is a positive message for the UK outlook in 2024, as we see inflation continue to fall, real incomes rising and growing signs that interest rate cuts are coming.
“Spending looks to be on an upward trajectory”.
Looming election
The figures came as the BRC’s Ms Dickinson said she hoped the “next government” could improve the outlook for businesses.
Opinion polls suggest the Labour Party is on course to win the next general election, which many commentators expect will be held this autumn.
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Currys boss slams government over retail costs
Ms Dickinson said: “With the spring budget in sight, and a general election looming, government cannot afford to ignore the needs of retailers and their customers.
“Employing three million people and supporting families and communities in every corner of the country, retail is the ‘everywhere economy’.
“By addressing the cumulative burdens, from business rates’ rises, to ill-conceived new recycling proposals to border control costs, the next government can unlock retail investment and boost local and national economic growth.”
An arms race for artificial intelligence (AI) supremacy, triggered by recent panic over Chinese chatbot DeepSeek, risks amplifying the existential dangers of superintelligence, according to one of the “godfathers” of AI.
Canadian machine learning pioneer Yoshua Bengio, author of the first International AI Safety Report to be presented at an international AI summit in Paris next week, warns unchecked investment in computational power for AI without oversight is dangerous.
“The effort is going into who’s going to win the race, rather than how do we make sure we are not going to build something that blows up in our face,” Mr Bengio says.
He warns that military and economic races “result in cutting corners on ethics, cutting corners on responsibility and on safety. It’s unavoidable”.
Mr Bengio worked on neural networks and machine learning, the software architecture that underpins modern AI models.
He is in London, along with other AI pioneers to receive the Queen Elizabeth Prize for Engineering, the most prestigious global award for engineering, in recognition of AI and its potential.
He’s enthusiastic about its benefits for society, but the pivot away from AI regulation by Donald Trump‘s White House and frantic competition among big tech companies for more powerful AI models is a worrying shift.
‘Superhuman systems becoming more powerful’
“We are building systems that are more and more powerful; becoming superhuman in some dimensions,” he says.
“As these systems become more powerful, they also become extraordinarily more valuable, economically speaking.
“So the magnitude of, ‘wow, this is going to make me a lot of money’ is motivating a lot of people. And of course, when you want to sell products, you don’t want to talk about the risks.”
But not all the “godfathers” of AI are so concerned.
Take Yann LeCun, Meta’s chief AI scientist, also in London to share in the QEPrize.
Yann LeCun, Meta’s Chief AI scientist
“We have been deluded into thinking that large language models are intelligent, but really, they’re not,” he says.
“We don’t have machines that are nearly as smart as a house cat, in terms of understanding the physical world.”
Within three to five years, Mr LeCun predicts, AI will have some aspects of human-level intelligence. Robots, for example, that can perform tasks they’ve not been programmed or trained to do.
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But, he argues, rather than make the world less safe, open-source AI models such as DeepSeek – a chatbot developed by a Chinese company that rivals the best of America’s big tech with a tenth of the computing power – demonstrates no one will dominate for long.
“If the US decides to clam up when it comes to AI for geopolitical reasons, or, commercial reasons, then you’ll have innovation someplace else in the world. DeepSeek showed that,” he says.
The Queen Elizabeth Prize for Engineering prize is awarded each year to engineers whose discoveries have, or promise to have, the greatest impact on the world.
Previous recipients include the pioneers of photovoltaic cells in solar panels, wind turbine technology and neodymium magnets found in hard drives, and electric motors.
Science minister Lord Vallance, who chairs the QEPrize foundation, says he is alert to the potential risks of AI.
Organisations such as the UK’s new AI Safety Institute are designed to foresee and prevent the potential harms AI “human-like” intelligence might bring.
Science minister Lord Vallance
But he is less concerned about one nation or company having a monopoly on AI.
“I think what we’ve seen in the last few weeks is it’s much more likely that we’re going to have many companies in this space, and the idea of single-point dominance is rather unlikely,” he says.
The Treasury Select Committee has sent a formal notice to HM Revenue & Customs demanding answers to critical questions about how it has been enforcing trade sanctions on Russia, following a Sky News investigation into the government department.
Last month Sky News reported that while HMRC had issued six fines in relation to sanction-breaking since 2022, it would not name the firms sanctioned or provide any further detail on what they did wrong. HMRC also admitted it had no idea how many investigations it was currently carrying out into sanction-breaking.
The admissions raised questions about the robustness of Britain’s trade sanctions regime, described by government ministers as the toughest in British history.
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How robust are UK-Russia sanctions?
While the UK has introduced rules preventing the export of certain goods to Russia, banned items are still flowing into the country via third countries in the Caucasus and Central Asia. Some suspect that part of the reason these flows continue is that HMRC is not enforcing the rules as robustly as it could be.
Following Sky News’ investigation, the chair of the Treasury Select Committee (TSC), Dame Meg Hiller, has written a letter to the chief executive of HMRC, Sir Jim Harra, with 10 questions about HMRC’s conduct in the enforcement of sanctions.
Among the questions, the TSC chair asks: “Why doesn’t HMRC publish information on breaches in sanctions in a similar way to the Office for Financial Sanctions Implementation (OFSI), which gives the details of the company, how it breached sanctions and the amount of penalty issued?”
Many other countries around the world – most notably the United States – routinely “name and shame” those who break sanctions, in part as a deterrent and in part to inform other businesses about what it takes to break the rules. But HMRC instead protects the privacy of those who break sanctions.
The TSC has been scrutinising the sanctions regime in recent months, examining loopholes in the legislation and its enforcement. HMRC has been asked to respond to the letter by 17 February.
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