High street feels December chill as retail sales fall
Retail sales fell 1.5% in December, according to the Office for National Statistics.
A dire Christmas on the high street was laid bare on Friday, with official figures showing the worst December sales performance since 2010.
Retail sales fell 1.5% month on month, according to the Office for National Statistics, a much heavier decline than economists had forecast.
The figures also marked the biggest month-on-month fall since June 2016, when the UK voted to quit the European Union.
Annual growth fell to 1.9% for the whole of 2017, well below expectations and the weakest rate of growth since 2013.
Consumer confidence has tanked since the referendum as Brexit-fuelled inflation erodes spending power and jacks up prices for shoppers already struggling with stunted wage growth.
Black Friday, which falls in November, has also meant people are doing Christmas shopping early, denting December sales figures.
ONS senior statistician Rhian Murphy said: “Consumers continue to move Christmas purchases earlier with higher spending in November and lower spending in December than seen in previous years.
“However, the longer-term picture is one of slowing growth, with increased prices squeezing people’s spending.”
The likes of Carpetright, Mothercare and Debenhams have all issued profit warnings in January after Christmas trading fell short of expectations.
While economists expect inflation to cool this year from its current 3%, and wage growth to pick up, political uncertainty is likely to mean that the retail sector remains under intense pressure.
Howard Archer, chief economic adviser to the EY Item Club, said: “The squeeze on consumers remains appreciable at the start of 2018, but it should progressively ease as the year progresses due to inflation falling back significantly and pay gradually picking up.
“However, employment growth is likely to be modest at best in 2018, while consumer confidence may well remain fragile amid significant economic, political and Brexit uncertainties.
“Meanwhile, lenders are becoming less prepared to make unsecured credit available to consumers and they are also tightening their lending standards.”