Retail sales hit lowest since 2021 Covid lockdown

UK retail sales last month suffered the largest drop since January 2021 when Britain was in Covid lockdown, as Christmas shoppers tightened belts in a cost-of-living crisis, data showed Friday.

Sales by volume dived 3.2 per cent in December, after gaining 1.4 per cent in November on Black Friday discounting, the Office for National Statistics (ONS) said in a statement.

That was far worse than expectations of a 0.5 per cent decline for December, which is traditionally boosted Christmas gift buying.

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

“This was the largest overall monthly fall since January 2021, when the reintroduction of pandemic restrictions knocked sales heavily.”

She added that food stores in December suffered their steepest fall since May 2021, with sales dented by early Christmas shopping in November.

“UK retail sales fell sharply in December as consumers tightened their purse strings during what is normally a hugely important time of year for retailers,” noted Craig Erlam, analyst at trading platform OANDA.

“Everyone from food retailers to department stores saw a sharp reduction in sales as consumers spent less on gifts and, as it turns out, food during the festive season.”

Friday’s data darkens the economic outlook following news of a surprise December acceleration in inflation, as drawnout strike action threatens to tip Britain into recession.

“As things stand, the odds that the economy fell into a technical recession in late 2023 have increased,” remarked EY analyst Martin Beck following the gloomy retail figures.

The economy shrank 0.1 per cent in the third quarter – and a fourth-quarter contraction would place it in a technical recession ahead of an election this year.

Separate data showed earlier this week that annual inflation unexpectedly picked up in December, dashing hopes of an early cut to UK interest rates and prolonging a cost-of-living squeeze.

The Consumer Prices Index quickened to 4.0 per cent from 3.9 per cent in November, confounding expectations for a modest slowdown.

(AFP)