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Retailers suffer worst December since 2010

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Retail sales fell more sharply than expected in the core Christmas month, capping the worst December performance for volumes since 2010.

The Office for National Statistics (ONS) issued the grim update on the health of the high street just hours after Carpetright became the latest big name chain to announce a profit warning.

However, many analysts said the decline in sales reflected shifting consumer habits rather than the squeeze on living standards from higher inflation and weak wage growth.
The retail figures showed sales volumes fell 1.5% on November, which was boosted by strong Black Friday trade.
December’s result marked the biggest month-on-month fall since June 2016 – the month when the UK was focused on the Brexit vote on 23 June.
The Leave win prompted a collapse in the value of the pound, resulting in a leap in shop prices during 2017 as a whole as stores passed on higher import costs.

Image: Major supermarket chains have reported growing sales over the festive season
Higher inflation, coupled with earnings failing to keep pace, has been a thorn in the side of the retail sector as the squeeze on shoppers’ budgets has dented demand for non-essential goods.
The ONS said 2017 was the weakest year for retail since 2013 but it still recorded year-on-year growth of 1.3% and a rise of 1% over the final quarter of the year.
The pound hit a new post-Brexit vote high of $1.3945 just after the data was released before falling back towards $1.39 moments later as all the information was digested.

:: How the major retailers have fared over Christmas
Senior ONS statistician, Rhian Murphy, said: “Retail sales continued to grow in the last three months of the year partly due to Black Friday deals boosting spending.
“Consumers continue to move Christmas purchases earlier with higher spending in November and lower spending in December than seen in previous years.”
But Ian Gilmartin, head of retail & wholesale at Barclays Corporate Banking, said: “Although it might look like a negative result for the retail sector at first glance, December’s retail data needs to be considered more carefully.
“A month-on-month dip and year-on-year rise appears difficult to assess, but the truth is that these kinds of comparisons are increasingly dangerous for retail analysts trying to untangle performance over the Christmas period.
“The pattern of trading is shifting, with variables including the evolving influence of Black Friday, timing of wider price cuts and importance of online trading disrupting traditional sales patterns.

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“As today’s data shows, purchases have been pulled forward to November which has had a knock-on effect on December’s figures.
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.”

Source: SKY