UK retail sales fall as shoppers plunge into festive spending

Retail sales in Britain unexpectedly fell by 1% last month as the cost of living crisis forced households to cut spending in the run-up to Christmas.

The Office for National Statistics (ONS) said the unexpected fall in sales – which economists had forecast to be a 0.5 per cent rise – was attributed to factors including a sharp rise in food prices, while a fall in online sales affected Christmas deliveries as consumers worried about postal strikes. goods.

The year-over-year decline in December was partly due to lower sales of cosmetics, sports equipment, games, toys, watches and jewelry, suggesting consumers reined in spending on gifts as high inflation left them with little money to spend.

Heather Bowell, deputy director of surveys and economic indicators at the ONS, said: “Retail sales fell again in December, with feedback suggesting consumers have cut back on their Christmas shopping due to affordability concerns.” “Online sales fell, Feedback suggests the postal strike is causing people to buy more in-store.”

The ONS said retail sales fell 5.7% year-on-year in the three months to the end of December, while sales in the final month of the year were 1.7% below pre-pandemic levels.

Grocery store sales fell 0.3% in December, according to the latest data, after rising 1% in the previous month, when many consumers tried to extend Christmas-related costs by stocking up early, with supermarkets blaming higher prices for higher prices.

Several major retailers in the UK reported bumper sales over the festive period, but this was mostly the result of higher prices rather than volumes.

Earlier this month, the British Retail Consortium said annual food inflation jumped to 13.3% in December, the highest monthly rate since data began collecting in 2005.

Overall, food store sales fell 5.9 per cent last year as the lifting of Covid restrictions led to the reopening of the hospitality industry and consumers spending more of their budget on eating and going out.

Sales at non-food stores, which include department stores, apparel, home goods and other non-food stores, fell 2.1% month-on-month in December, as consumers continued to cut back on spending amid rising prices and affordability concerns.

Sales at non-food stores fell 6.2%, driven by declines in cosmetics and jewelry stores, as well as purchases of sporting equipment, games, toys and watches.

Department store sales fell 3.1 percent after rising 2.1 percent in November, helped by an extended Black Friday sale.

Clothing and home goods stores, such as furniture retailers, were the only bright spots in December, with sales rising 1% and 1.5% mom, respectively.

Spending on online shopping fell 2.9 percent, with declines in all sectors except household goods and food stores. Some retailers say Royal Mail’s six-day strike in December has led to more in-store shopping.

Overall retail sales will fall by 3% in 2022, compared with 5.2% growth in 2021, the ONS said.

“On a broader scale, retail sales are down in 2022 compared to 2021, largely reflecting declines in online retail and food stores,” Bovill said. “The retail sector in particular has been squeezed by generally higher prices and rising costs of living in recent months, with consumers spending less as a result.”

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