Retail sector endures worst year since 2013
THE amount bought by UK shoppers fell sharply in December to round off the weakest year for retail sales since 2013.
Consumers reined in their spending last month after Black Friday deals encouraged them to buy presents earlier, boosting November by 1 per cent.
December sales volumes slumped by a bigger-than-expected 1.5 per cent from the previous month – the biggest monthon-month fall since June 2016 when we voted to leave the EU and the worst December performance for seven years.
The referendum result triggered a sharp fall in the value of the pound, pushing up costs for retailers and prices paid by shoppers. Wage rises have failed to keep pace with inflation, squeezing household budgets.
The amount spent in December was down 0.9 per cent from the previous month, according to the Office for National Statistics.
ONS senior statistician Rhian Murphy said: “Consumers continue to move Christmas purchases earlier, but the longer-term picture is one of slowing growth, with increased prices squeezing people’s spending.”
Sales over the fourth quarter rose by 0.4 per cent, half the growth in the previous three months, while the 1.9 per cent increase in retail sales over the whole of 2017 was the lowest for four years. Retail Economics’ Richard Lim said: “Black Friday was the starting gun for a frenzy of promotional activity until Christmas and beyond. All of this discounting is likely to have decimated profit margins and retailers will be counting the cost.”
Chris Williamson at IHS Markit said retail sales will have had a “negligible” impact on economic growth in the closing quarter of 2017. GDP is forecast to have risen by 0.4 per cent from the previous three months.
EY ITEM Club’s Dr Howard Archer said confidence among consumers, who are cutting back on their demand for credit, would remain “fragile”.
Meanwhile, lenders are less prepared to make unsecured credit available and tightening their lending standards.