Retail sales slide in December on high inflation: ONS

Inflation-pinched British shoppers unexpectedly cut their spending in December, official data showed on Friday, dashing hopes for a Christmas shopping boost for the country’s flagging retail sector.

Retail sales volumes fell by 1 per cent in December from November, the Office for National Statistics said.

“Retail sales dropped again in December with feedback suggesting consumers cut back on their Christmas shopping due to affordability concerns,” Heather Bovill, the ONS’s deputy director for surveys and economic indicators, said.

Food sales had risen in November as shoppers stocked up early for Christmas, but they fell back again in December with supermarkets linking the drop to higher food prices and the rising cost of living, she said.

Compared with December 2021, sales were down by 5.8 per cent, the biggest fall for that month in records going back to 1997.

In terms of value, spending was down by a month-on-month 1.2 per cent from November.

Britain’s consumers are a major driver of the economy and they are expected to be cautious about their spending in 2023 as high inflation continues to erode the value of wages.

Official data Wednesday showed UK annual inflation slowed to 10.5 per cent in December.

However it remains close to a four-decade high that is causing a cost-of-living crisis and mass strikes by workers, including nurses, teachers and the railway sector.

A survey published earlier on Friday showed a first drop in three months in consumer confidence in January which fell back close to its lowest level since at least 1974.

“Pressure on UK consumers is mounting and is likely to build in the coming months. With many people on fixed rate mortgages, the impact of interest rate rises has yet to be really felt,” commented Charlie Huggins, head of equities at Wealth Club.

“It’s times like these that tend to sort the wheat from the chaff. Retailers must be able to generate profit and cash, while offering customers value for money. If not, they risk following the same path as Joules and Made.com.”

Andrew Goodacre, chief executive of rhe British Independent Retailers Association, said: “We now have confirmation that December and the festive period was disappointing for retailers.

“There seems to widespread acceptance that inflation will fall this year with the costs of energy falling and so the government must use the Spring statement in March to announce ways of boosting the economy.

“Levelling up projects were announced yesterday but they are long term projects. Independent retailers need something this year if the high streets are to thrive again,” he said.