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Economic News

Retail sales slump unexpectedly in December - ONS

By Abigail Townsend

Date: Friday 19 Jan 2024

LONDON (ShareCast) - (Sharecast News) - UK retail sales fell at the fastest pace since the start of 2021, official data showed on Friday, missing analyst expectations.
According to the Office for National Statistics, retail sales volumes declined 3.2%, reversing an upwardly revised 1.4% increase in November.

It was the largest monthly fall since January 2021, when much of the country was in lockdown. Most analysts had been expecting a 0.5% decline.

Year-on-year growth declined to 2.4% from 0.2% in November.

In the three months to December, sales fell 0.9% quarter-on-quarter.

Both food and non-food sales were affected. Non-food sales volumes fell 3.9%, from a 2.7% increase in November, while food store sales were down 3.1%.

Heather Bovill, deputy director for surveys and economic indicators at the ONS, said: "Following a strong November, retail sales plummeted in December with all types of outlets being hit.

"Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales.

"Department stores, clothing shops and household goods retailers reported sluggish sales too as consumers spent less on Christmas gifts, but had also purchased earlier during Black Friday promotions, to help spread the cost."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The golden quarter for retailers was tarnished by lingering consumer caution, but demand should pick up tangibly this year as households' real disposable incomes continue to recover."



Danni Hewson, head of financial analysis at AJ Bell, said: "Retailer after retailer has been warning that this Christmas has been tough, and these figures lay bare just how hard things have been.

"People shopped early, spreading the cost of gift buying and making the most of the big discounts on offer during Black Friday sales.

"The big question is did people spend their money elsewhere or not at all? The answer to that is likely to be the deciding factor in whether or not the UK has fallen into a technical recession.

"Raising the cost of borrowing was supposed to hurt - it was designed to stop us from spending and it seems to have worked."

Martin Beck, chief economic advisor to the EY Item Club, said: "The odds of an upward revision seem high. But as things stand, the risk that GDP also contracted in the fourth quarter, leaving the economy in technical recession, has grown.

"Retailers aiming to overcome a weak trend will encounter obstacles.

"But we think upsides for the consumer sector should be sufficient to outweigh those headwinds and return retail sales to growth in 2024."

Joshua Mahony, chief market analyst at Scope Markets, said: "UK retail sales data finally saw consumer pushback after years of paying more for less.

"Unfortunately for UK businesses, the data also serve as a warning over expectations for Christmas revenues."

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