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    Retail sales slump 3.7 per cent in December: ONS

    Shoppers walk along Regent Street on December 18, 2021 in London. (Photo by Hollie Adams/Getty Images)

    Retail sales slumped by 3.7 per cent in December from November when consumers did much of their Christmas shopping earlier than usual, according to official data which also suggested an impact from the Omicron coronavirus variant.

    This is the biggest fall since January 2021 when the country was under a coronavirus lockdown. Compared with December 2020, sales volumes were down by 0.9 per cent, the Office for National Statistics said on Friday.

    Economists said the scale of the hit bolstered their expectations that the world’s fifth-biggest economy shrank last month under the strain of Omicron and new government restrictions to slow its spread.

    “After strong pre-Christmas trading in November, retail sales fell across the board in December, with feedback from retailers suggesting Omicron impacted on footfall,” ONS Deputy Director for Surveys Heather Bovill said.

    “As Plan B restrictions in England meant more people working from home, there was a notable fall for fuel sales,” she added, referring to government measures to tackle the pandemic.

    But retail sales remained stronger than before the pandemic, with over a quarter of sales now made online, she said.

    Bethany Beckett, an economist at Capital Economics, said the data backed her view that the surge in Omicron cases in the run-up to Christmas may have caused the economy to shrink by 0.5 per cent in December or possibly more.

    Retail sales would probably recoup the hit between January and March as the government lifts its Covid restrictions but “with the UK’s cost of living crisis looming, we expect a weakening in the consumer recovery to dampen retail sales further ahead,” she said.

    Consumer price inflation hit a nearly 30-year high of 5.4 per cent in the 12 months to December. Average earnings in the three months to November, excluding bonuses, rose by 3.8 per cent compared with the same period of 2020.

    A survey published earlier on Friday showed consumer confidence fell in January to its lowest since February 2021 when the country was under lockdown.

    The ONS data showed non-food sales slumped by 7.1 per cent in December from November, also the biggest fall since January last year. Clothing sales hit hardest by a fall of 8 per cent.

    Retail sales recovered quickly from their 2020 pandemic slump when restrictions were first lifted.

    But the rise in inflation led by surging energy prices, the prospect of higher interest rates and a tax hike in April will test the appetite of consumers to keep on spending in 2022, retail executives have warned.

    “Customers face strong headwinds in 2022, with energy prices and National Insurance contributions both set to rise,” Helen Dickinson, chief executive of the British Retail Consortium, said.

    “The remaining disposable income also faces greater competition from a resurgence in tourism, eating out, sport and live music. Rising inflation is reducing consumer demand while increasing the costs for businesses. Retailers face rising wage bills, increased transport costs, and increased checks and documentation as a result of new import controls, all of which are forcing up prices at the checkout.”

    Business advisory firm RSM UK has warned that the cost of living crunch is set to hit retail sales further, calling for government intervention.

    “At a time when the sector is still reeling from a difficult Christmas period, another blow to sales at the start of 2022 is the last thing retailers need,” Jacqui Baker, partner and head of retail at RSM UK, said.

    “Any government support to take the sting out of the cost of living crisis would be welcomed to allow the sector time to recover as we re-emerge from the Omicron peak. This will allow consumer confidence to improve as restrictions lift and employees will return to the office, boosting footfall and potential sales.”

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