Newsquawk

UK Retail Sales MM* (Jan) 3.4% vs. Exp. 1.5% (Prev. -3.2%, Rev. -3.3%)

ONS

"This was the largest monthly rise (sales volume) since April 2021 and returned volumes to November 2023 levels."

"Sales volumes in all subsectors except clothing stores increased over the month, with food stores such as supermarkets contributing most to the increase."

"Consumers spent more for less in January 2024, as the 3.9% monthly rise in sales values (the amount spent) exceeded the 3.4% rise in sales volumes."

Food stores sales volume at 3.4% over the month, recovering from December's record -3.1% print; "Some of the fall in December was because of consumers purchasing Christmas gifts earlier, during the November Black Friday discounts. But 46% of surveyed adults still reported plans to spend less on Christmas shopping because of the rising cost of living..."

Online sales fell for most subsectors, amount spent online -4.1% M/M but 1.0% Y/Y, increase most likely due to inflation.

via ONS

Reaction details (07:10)

A much stronger than forecast print which sparked a hawkish reaction, specifically GBP/USD spiked higher from 1.2579 to 1.2604 before paring around half of the move. Bund Mar'24 slipped from 133.31 to 133.20, before extending a handful of ticks lower thereafter.

Market Pricing via Reuters, 07:30GMT

Analysis details (07:20)

A particularly strong retail sales print which rounds off a week of key UK data; wages/unemployment, CPI & GDP.

Overall, the release speaks to the signs of an upturn mentioned by BoE's Bailey before the Q4 GDP print. The metrics have sparked a hawkish reaction in GBP & EGBs (Gilts yet to open) and we will likely see a similar move in market pricing which will further erode the odds of a June cut and could result in August no longer being priced. In short, the Table Mountain approach remains in play as the BoE awaits developments on wage growth and headline/all services CPI.

The retail sales volume metric saw the largest month rise since April 2021 with volumes back at November levels, within this food stores volumes also rebounded to 3.4% M/M in a substantial recovery from December's record -3.1% reading. On the December number, ONS writes that some of the fall was due to earlier Christmas activity during November's Black Friday but that some 46% of adults intended to spend less over the period due to increased cost of living; a finding which can be taken hawkish or dovishly, depending on whether it is viewed from an inflation or growth narrative.

16 Feb 2024 - 07:00- ForexImportant- Source: Reuters