UK retail sales unexpectedly fall in December

UK retail gross sales unexpectedly fell in December as customers struggled with rising inflation throughout the essential Christmas purchasing interval.

The quantity of retail gross sales within the UK fell 1 per cent between November and December, in accordance with figures launched on Friday by the Workplace for Nationwide Statistics.

The determine was effectively under the 0.5 p.c enhance forecast in a Reuters ballot of economists.

Retail gross sales fell regardless of authorities funds to assist households with rising residing prices, which have been delivered in mid to late November and in accordance with Chief Paul Dales “ought to have given an additional enhance to spending forward of Christmas”. British economist at Capital Economics.

The determine is the second month-to-month decline in retail gross sales after a 0.5 p.c drop in November, when Black Friday failed to supply a major enhance to gross sales.

Grocery gross sales volumes fell 0.3 p.c in December after rising 1 p.c the earlier month. “After final month’s rebound, when buyers stocked up early, grocery gross sales fell once more in December,” mentioned Heather Bovill, ONS deputy director of surveys and financial indicators.

Non-food gross sales quantity fell 2.1 p.c over the month. Inside this class, gross sales quantity from clothes shops rose 1 p.c, whereas dwelling items shops corresponding to furnishings shops have been up 1.5 p.c for the month.

However the determine was dragged down by a giant drop within the “different” non-food gadgets subcategory, which fell 6.2 p.c on declines in standard present classes like toys, cosmetics, jewellery and sports activities gear, in accordance with the ONS.

“The autumn in gross sales in December suggests that buyers didn’t see Christmas or the World Cup as a powerful sufficient incentive to ease their wallets,” mentioned Aled Patchett, head of retail and client items at Lloyds Financial institution.

On-line purchasing fell to 25.4 p.c from 25.9 p.c in November, with some on-line retailers reporting being set again by Royal Mail strikes final month.

Newest information from the ONS public opinion survey, protecting the interval between December 21 and January 8, confirmed that 65 p.c of adults have been spending much less on non-essential gadgets as their value of residing had risen.

The ONS outcomes agree with separate information from analysis agency GfK launched on Friday which confirmed this UK client confidence stayed under minus 40 for the ninth straight month in January, marking the longest stretch of pessimism in almost 50 years.

“With client confidence falling once more in January,” weak retail gross sales “would very doubtless proceed because the broader financial system slips into recession in 2023,” mentioned Olivia Cross, affiliate economist at Capital Economics.

The info as client inflation barely all the way down to 10.5 p.c final month after hitting a 41-year excessive of 11.1 p.c in October.

“With the UK forecast to enter recession this yr, mixed with continued sky-high power payments and falling financial savings for a lot of households, retailers face a difficult yr,” mentioned Phil Monkhouse, gross sales director at monetary companies agency Ebury.