Brexit: UK retail sales fell sharply in December
Consumers squeezed by high inflation as sales fall by more than expected
British shop sales slid by much more than expected in December, capping off the weakest year for retail since 2013 as consumers squeezed by high inflation continued to keep a tight grip on spending.
Retail sales volumes dropped 1.5 per cent from November, the Office for National Statistics (ONS) said, well below economists’ forecasts in a Reuters poll for a monthly dip of 0.6 per cent and more than reversing a 1.0 per cent rise in November.
That marked the biggest month-on-month fall since June 2016, the month Britons voted to leave the European Union, as well as the weakest December performance for seven years. “The longer-term picture is one of slowing growth, with increased prices squeezing people’s spending,” ONS statistician Rhian Murphy said. The ONS said many shoppers brought forward their Christmas spending into November to take advantage of Black Friday sales promotions.
Looking at the fourth quarter as a whole, which smooths out monthly volatility in the data, sales growth slowed to 0.4 per cent, compared with 0.8 per cent in the third quarter.
The ONS said retail sales will contribute almost nothing to economic growth in the last three months of 2017. Britain’s economy slowed in 2017 as higher inflation - caused by the post-referendum fall in the pound – hurt the spending power of consumers, although forecasts for a bigger hit were confounded.
The Bank of England expects the squeeze will ease in 2018 as inflation cools and wage growth ticks higher, although surveys of consumers suggest they do not share the central bank’s optimism right now.