The British Retail Consortium (BRC) has released its retail sales and price predictions for 2021 and 2022.
A summary of the BRC Analysts’ Forecasts for 2021 and 2022 Retail Sales and Prices is as follows:
- For 2021, we project Total Sales to increase by 1.2% (a downward revision from 1.4% projected in Q4), with Food sales rising by 0.3% (an upward revision of our Q4 forecast of 0.0%), and Non-Food sales increasing by 2.0% (a downward revision from our Q4 projection of 2.5%).
- For 2022 we forecast Total Sales to increase by 0.7%, with Food sales projected to rise by 1.5%, while Non-Food sales projected to remain at the same level as in 2021, with growth of 0.0%.
- The success of the vaccination rollout is expected to lead to a rapid recovery in output, as restrictions would be eased. Strong monetary and fiscal support is likely to be maintained in 2021. However, uncertainty is likely to hold business investment in a holding pattern. Households, although they have built a significant amount of savings in 2020, might not be ready to release their pent-up demand if they are pessimistic about the future. Although, with the hospitality industry shut for several months this year, it’s likely that some hospitality spend will be substituted for retail spend.
- We revised our Shop Prices forecasts for 2021: we now expect overall prices to fall by 1.0% (compared to our Q4 forecast of -0.8%), with Food prices increasing by 1.3% (a downward revision of our Q4 forecast of 2.0%), and Non-Food prices decreasing by 2.2% (unchanged from our Q4 forecast).
- For 2022, we predict Food prices will rise by 2.0% and Non-Food prices will fall by 1.8% (a downward revision on our previous forecast of -1.9%), bringing Shop Price growth to -0.5%.
- Prices will see upwards pressures in 2021, as headwinds are gathering pace. The new border requirements, in the form of new checks and paperwork, are costly. Global shipping costs have been rising since November due to a shortage of empty containers in the right ports. And Food prices also face upward risks from the evolution of global food prices, which have persistently risen from mid-2020 to reach their highest level in six years in December. However, some factors at play might limit the magnitude of price rises. In the Food sector, fierce competition is likely to result in retailers absorbing some of the costs increases to maintain market share.