I never really think about how the winter season can effect the sale of car fuel and food sales until I read this and thought about it. It makes sense that car fuel sales go down when the weather is bad and people don’t want to drive their cars due to fears of getting in an accident. But I am surprised that food sales slip in the winter, at least with my teammates and friends, we eat more now than we usually do J. But the effects of the weather are talked about in this article focusing in sales in the U.K.
Poor winter weather drove UK retail sales down by 1.8% between December and January, the sharpest drop in 18 months, official figures have shown.
The fall was more than three times faster than analysts had forecast.
However the figures were weighed down by the inclusion of petrol in the official figures for the first time as drivers stayed at home in the snow.
The data, from the Office for National Statistics, adds to concerns about the fragility of the UK economic recovery.
Sales by value were up 0.9% from January 2009.
Fuel sales slipped by 11.1% on the month. When the impact of car fuel sales was stripped out, overall retail sales fell by 1.2%.
Food sales fell by 2.4%, but the ONS said the cold weather had boosted sales of clothing.
'Double-dip' risk
The period covers the first month since Value Added tax (VAT) returned to 17.5% after a temporary drop to 15%.
This is thought to have brought some sales forward to December, thereby hurting the January figures.
The data follows on from news that UK inflation had accelerated to 3.5%, that the government borrowed another £4.3bn in January to plug the growing hole in the UK's finances and there had been an unexpected rise in people claiming Jobseeker's Allowance.
"January's retail sales figures round off a pretty awful week for news on the UK economy," said Jonathan Loynes, chief European economist at Capital Economics.
"Of course, we knew the January sales figures would be bad after the VAT rise and bad weather. But the drop is even worse than the retail surveys had suggested."
He added that sales could bounce back in the coming months - but that as people's wages grew only slowly and prices roses, spending growth was likely to slow.
"At the very least, these numbers provide a very weak platform for sales in the first quarter of this year and therefore raise the chances that the economy may succumb to a double-dip (recession)," Mr Loynes said.
The so-called 'double dip' refers to an economy in recession returning to growth, then quickly contracting again.
Even though bad weather can hurt sales in one area of the economy, sales can still rise in another part of the economy. With bad winter weather people will buy more coats and shovels to help fend off the bad weather. Fuel sales and food sales might fall, but that may be temporarily. The value added tax probably had a lot to do with the drop in sales as well. (A)
ReplyDeleteI agree with Jason tht the VAT had alot to do with the drop. While reading the article, I was surprised by just how far fuel sales had slipped. 11.1% is a pretty big amount. While this is bad for an already fragile economy, it IS to be expected with a snowy winter. I think sales will bounce back soon.
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I was actually thinking about this exact subject, the effect of weather on sales as I walked downtown yesterday. The sun was shining and I saw more people down there than ever before since summer. Businesses could certainly use the increased foot traffic to up sales that may have dipped in the past few months.
ReplyDeleteI wonder if the weather affects shopping in Britain more than in the US since people are more likely to walk while shopping than the ubiquitous driving shopping run here in the US. I am surprised to see that food sales went down....I would think that necessities such as food would stay at a constant, but maybe the drop in sales has more to do with luxury food items or dining out.
I'd be interested to see the figures on U.S. food sales.
I also wonder whether what they consider as "food" includes things that come from restaurants. It would make sense if that was the case, since people would be more likely to buy the necessary staples at the market rather than doing things like going out to eat when the weather's not good for travling. I'm sure that areas in the U.S. that have been dumped on by snow are having the same issues, though we don't have to deal with the VAT.
ReplyDeleteThe drop in sales makes sense since people don't want to go out in the winter. They just wait for what they have to be used up and then they will go out. My grandma is a perfect example of this. If it's cold out she doesn't leave her house, and won't until it's nicer out. I'm sure the VAT also added to people traveling less and staying in more. I'm sure warmer weather will bring sales back up to normal levels. A, E
ReplyDeleteWhile I could see the point that a drop in fuel and food sales in the winter weather would be countered by a rise in snow gear sales, the amounts probably do not compare, shovels are a lot cheaper than gas. I really hope that the U.K. is not in for a "double dip" because it means we could likely face one as well.
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While shovels don't compare to the price of gas, I think money that invested in interior heating could definitely help even out overall figures for the economy of any region that is faced with a cold winter. Think of it as a trade off: if you're not going to spend money putting gas in your car when it's cold outside, then you're going to spend most of your time inside with the heat at a comfortable level. The cost of heat may not be exactly what the cost of fuel is, but it's got to add up if the majority of people are spending most of their time inside.
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The weather can have a great impact on sales like the article mentions it, people are least likely to come out of their houses if they think they have a chance of getting into an accident but an increase in winter clothing can be the positive thing that can make up for the decrease on other sales. I think that their is always going to be an item or product thats going to be affected by the weather but then another product is going to make up for it because its a necessity that people will need for the bad weather. E.A
ReplyDeleteI think it's kind of unfortunate that something like the weather, which we have no control over, can effect the economy so greatly. Granted, the VAT did probably have a lot to do with this situation, but the weather definitely took its toll too. I do agree with Jason though in the fact that when one branch of the economy struggles, another could flourish. A
ReplyDeleteI didn't really think about the impacts of the weather on the economy before. This interesting. I agree with Nick's comment that the main reason why people would reduce their consumption of fuel and food is because they would rather stay inside where its warm and there's less probability of an accident.
ReplyDeleteThe immediate effects of the tax would also affect the market as people would consume less of these products. Hopefully, the sales will return to normal soon so that its ripple effects won't affect other major markets. A
This is quite interesting...I've never thought about the weather as an influence factor in economy. It makes sense to me that people don't feel like going out for shopping on rainy days, but the percentage is so big that makes me wonder if there are any additional factors that affect the sales in bad weather.
ReplyDeletePersonally I think the fall in gas is really surprising. In cities, people who bike, walk/jog, or take public trasnportation are commonly seen. However, people are far less willing to do this and return to their enclosed transporters with the onslaught of winter.
ReplyDeleteHowever from what I remember of the UK, traffic was halted for hours with the sudden oncoming of a few inches of snow. I would be interested to see the comparison of gas costs in cities that experienced heavy snow on a regular basis.
I agree that bad weather can have both positive and negative effects on our economy. People will indeed have to buy more tools and other necessities in order to fend off the weather. But other companies that are not being utilized because of the weather would suffer somewhat.
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