UK retail sales slip in gloomy end to 2018

UK retail sales fell in December as British consumers pulled back on shopping after scooping up Black Friday promotions and remained cautious ahead of the country’s divorce with the EU, according to new data released on Friday. 

The volume of sales was down 0.9 per cent in December from the previous month, the Office for National Statistics said. The decline was slightly worse than the 0.8 per cent forecast by economists surveyed by Reuters and came after a 1.3 per cent rise in November. 

“These figures confirm that Christmas was an extremely challenging period for the retail industry,” said Richard Lim, chief executive of Retail Economics.

All sectors, other than petrol stations and food stores, experienced declines during the key holiday month, the ONS said. For the year, retail sales growth was 2.7 per cent, from a peak two years ago of 4.7 per cent. 

“Following the increased growth in November, where shoppers snapped up more Black Friday offers as they continue to bring forward their Christmas shopping, retail sales weakened in December,” said Rhian Murphy, ONS head of retail sales.

Samuel Tombs, economist at Pantheon Macroeconomics, added that “consumers have become increasingly concerned by the risks posed to the economic outlook by Brexit and retailers have borne the cost”.

In December, market research company GfK’s composite index of consumer confidence declined to its lowest level since July 2013.

This is in contrast with “consumer fundamentals that have improved over recent months, with real wage growth gradually rising and the jobs market that has stayed resilient”, said James Smith, economist at ING.

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On a quarter on quarter basis, UK retail sales contracted by 0.2 per cent in December, compared with an expansion of 0.2 per cent in November. This measure is less affected by issues of seasonal adjustment related to increased spending patterns for Black Friday and slower spending growth in December.

December also marks the first contraction in the value of shopping in the last quarter of the year compared with the previous quarter since the end of 2015. 

Non-food sales were the largest contributor to the month-on-month decline seen in December 2018. “This was mostly due to the unwinding of the Black Friday boost,” said Thomas Pugh, economist at Capital Economics. 

Online sales as a proportion of all retailing rose to 20 per cent in December, compared with 17.9 per cent in December 2017.

“It’s becoming apparent that the festive period is increasingly transitioning towards the online channel,” said Mr Liam.



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