UK retailers have recorded their worst December since 2010, with official figures revealing sales volumes plunged last month by much more than feared.
The weak retail sales figures heightened worries over financial pressure on households and the state of the UK economy, and weighed on the pound.
Seasonally-adjusted figures published yesterday by the Office for National Statistics show UK retail sales volumes tumbled by a seasonally-adjusted 1.5 per cent month-on-month in December, a significantly worse outturn than the 0.6 per cent fall projected by economists. It was the steepest December fall for seven years.
The ONS figures show 2017 saw the worst annual performance for retail sales since 2013, with volumes last year up by just 1.9 per cent on the preceding 12 months.
Chris Williamson, chief business economist at IHS Markit said: “There was very little Christmas joy for retailers as sales slumped in December, according to the latest official data, rounding off the worst year since 2013.”
The tumble in retail sales volumes in December significantly more than offset a downwardly-revised one per cent month-on-month rise in November, a period that included heavy Black Friday price promotion activity.
Retail sales volumes in the fourth quarter of last year were up by only 0.4 per cent on the preceding three months. Howard Archer, chief economic adviser to the EY ITEM Club think-tank, said this quarter-on-quarter rise “does not make for pretty reading”.
Mr Archer added: “Retail sales fell back sharply in December, capping a disappointing fourth quarter for retailers as squeezed consumers limited their spending. While a drop in December was always likely after sales had been lifted in November by Black Friday promotions, the decline exceeded all expectations. This confirmed that Black Friday deals had brought forward sales into November rather than lifting them overall.”
The ONS figures show both food and non-food sales volumes dropped sharply in December, and also signal hard-pressed consumers faced a sharp year-on-year rise in prices last month. The implied deflator signalled the prices at which retail sales were made were in December up by 3.1 per cent overall on the same month of 2016.
Inflation has surged on the back of sterling’s post-Brexit vote weakness. Annual UK consumer prices index inflation was three per cent in December, up from 0.3 per cent in May 2016 ahead of the Brexit vote.
Mr Williamson said: “The data add to signs that rising prices and stubbornly weak pay growth continue to erode consumer spending power and will act as a drag on the economy in 2018. Although inflation is likely to moderate in 2018, the weak pound and higher oil prices will continue to push prices higher.”
He added: “The monthly December retail sales decline was the worst for seven years, though traditional spending patterns have been distorted by Black Friday discounts boosting sales in November in recent years. That said, sales over the fourth quarter as a whole were up only 0.4 per cent, representing a halving in the rate of growth seen in the third quarter. As such, retail sales will have had a negligible impact on economic growth in the closing quarter of 2017.”
The pound fell against the dollar and the euro yesterday. Sterling was, at 5pm in London, trading around $1.3855, down from $1.3887 at the previous close. The euro was trading around 88.32p at 5pm, up from 88.09p at the close on Thursday.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel