RETAIL sales volumes in Great Britain tumbled by one per cent month-on-month in December – confounding expectations of a 0.5% rise – seasonally adjusted figures showed yesterday.
Buoyant trading updates from supermarket groups and the likes of Marks & Spencer and Next had raised hopes the overall sector might have enjoyed solid sales volumes during the festive season.
However, yesterday’s retail sales figures from the Office for National Statistics signalled the cost-of-living crisis had taken its toll after all.
The 1% month-on-month drop in retail sales volumes in December was driven by a 2.1% tumble in the non-food stores category. It followed a 0.5% month-on-month decline in November, which was revised yesterday from a 0.4% fall. Economists polled by Reuters had overall forecast a 0.5% rise in sales volumes in December.
Comparing December with the same month of 2021, retail sales volumes in Great Britain were down by 5.8%. And volumes over 2022 as a whole were down by 3% on 2021.
Martin Beck, chief economic adviser to the EY ITEM Club think-tank, said: “December’s decline meant that retail sales volumes fell 3.0% in 2022 as a whole. This was partly a reflection of the post-pandemic normalisation of spending patterns, and partly due to very high inflation squeezing household spending power. Households face another decline in real incomes in 2023, owing to still-high inflation, rising debt service payments for mortgage holders and tighter fiscal policy. So far, there has been an apparent reluctance for households to push against these forces by saving less or borrowing more, and it’s uncertain whether this pattern will change in the near term.”
Sophie Lund-Yates, at stockbroker Hargreaves Lansdown, said: “Customers are cutting back more than forecast, especially in non-food stores as they grapple with very real affordability concerns.”
Emma-Lou Montgomery, associate director for personal investing at fund management group Fidelity International, said: “The weight of the cost-of-living crisis clearly hung heavily in the air, and the postal strikes, train and bus strikes and a pre-Christmas cold snap across much of the country, did little to get shoppers in spending mode. As a result, sales fell across the board – online, in-store and across food and non-food items.
“As we have seen, some retailers managed to post a rise in Christmas sales, but that was largely a result of soaring prices on festive must-haves, rather than the much hoped-for annual spending spree.”
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