UK retail sales fell the most in 18 months in December as a post-Black Friday lull rounded off a rough year for British shops.
It’s further evidence that inflation and shaky consumer confidence are hitting British stores, many of whom remain cautious about the outlook for the coming year. Fourth quarter sales gained just 0.4%, half the pace seen in the previous three months.
Quarterly sales from a year earlier saw growth of just 1%, the worst reading since May 2013. The yearly gain in 2017 of 1.9% was also the smallest in four years, the Office for National Statistics reported on Friday.
A number of retailers have sounded cautious about the year ahead. Carpetright, the nation’s largest seller of floor coverings, on Friday reported a “sharp deterioration” in its UK business as people have become more reluctant to spend on discretionary items.
Inflation Squeeze
Bank of England policy maker Michael Saunders said Wednesday that the inflation squeeze on households will continue to restrain spending in 2018 - a view shared by economists in a Bloomberg survey, who see slower-than-average consumption growth.
Black Friday has disrupted the Christmas shopping season since the American bargain frenzy was introduced in the UK in 2010. Purchases previously made in December are being brought forward, and retailers complain the pressure to keep prices low is damaging margins at the most crucial time of the year.
The volume of goods sold in shops and online fell 1.5% from November, when heavy discounting saw sales jump 1 percent, the ONS said. It was the biggest drop since June 2016 and the most for a December in seven years. Sales excluding auto fuel declined 1.6%.
Sales of household goods plunged 5.3% and clothing sales fell 1%. Only department stores saw an improvement, with sales rising 0.6%.
“The longer-term picture is one of slowing growth with increased prices squeezing people’s spending,” said ONS statistician Rhian Murphy.
News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine
