People walk along a busy shopping street during the traditional Boxing Day sale in London, Britain. file | Photo Credit: Reuters
Inflation-stricken British consumers cut their shopping by the most in at least 25 years in the key month of December, official figures showed on Friday, dashing hopes of a Christmas boost for the country’s flagging retail sector .
Sales volume was reported to decline 5.8% compared to December 2021, the largest decline for that month in records going back to 1997, and the ninth consecutive month they fell annually.
Sales unexpectedly fell 1% from November, the Office for National Statistics said, confounding forecasts for a 0.5% monthly increase in a Reuters poll of economists.
Olivia Krauss with consultancy Capital Economics said the surprise decline suggested some of the resilience seen in the economy towards the end of 2022 was lost in December.
“What’s more, we think the severe pressure on activity from higher inflation and rising interest rates has not yet been felt,” she said.
A survey showed consumer confidence in January fell for the first time in three months, nearing its lowest level since at least 1974.
The UK economy is widely expected to slip into recession.
Retail sales volume is set to fall 3.0% in 2022, their worst full-year performance since at least 1997.
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 again in December, as supermarkets were forced to continue the slump. was linked to the rising cost of
Food sales declined 0.3% in December after a monthly increase of 1.0% in November. The sales volume of non-food stores declined by 2.1%.
In value terms, total spending was down 1.2% month-on-month from November.
development plan
On Thursday, Bank of England Governor Andrew Bailey sounded a more hopeful note, saying that the recent decline in inflation is “the beginning of a sign that a corner has been turned.”
Nevertheless, the BoE is expected to hike interest rates for the 10th time in a row on 2 February.
Helen Dickinson, chief executive of the British Retail Consortium, said retailers and customers still face cost pressures, but conditions will improve in the second half of 2023.
Christmas trading updates from Britain’s biggest retailers including Tesco, Sainsbury’s and Marks & Spencer were better than expected with shoppers returning to stores at the expense of a key trend online.
The ONS said online sales were down due to a strike by postal workers in December.
Online retailer Boohoo reported an 11% drop in revenue over Christmas, hurt by strikes.
The increased cost of living affected high-end retailer Ocado in results announced earlier this week.
Tesco chairman John Allen said Friday’s figures underscored the need for a long-term economic growth strategy.
“What we would love to see from the government is a really serious, thoughtful, long-term development plan,” Allen told BBC Radio.