Retail sales fall sharply in December

Retail sales fell again in December as a Christmas shopping spree failed to materialise.

Sales volumes fell by 0.6% from November, the fifth month in a row without growth, the Office for National Statistics said.

It comes amid worries about economic growth and forecasts that the Bank of England could cut interest rates soon.

Food stores were hard hit, with the quantity bought falling by the biggest amount since December 2016.

“Anecdotal evidence from a number of stores stated that goods did not sell as well as expected,” the ONS said.

The latest figures are published as UK High Streets continue to face tough trading conditions, with big chains such as Mothercare and Thomas Cook going bust in recent months.

The December 2019 figures, unlike those for the same month in 2018, include Black Friday sales, but the ONS said it had seasonally adjusted its data to account for this shift.

Trading statements for the Christmas season from the country’s biggest supermarkets had already indicated that households spent less on festive fare in 2019 than they had the previous year.

Sales at food stores fell 1.3% in December from the previous month, the ONS said.

Department stores were also under pressure, with sales down 1.8% month-on-month, as were clothing stores, which saw a 2% fall in sales.

This is yet more proof, if it were needed, that December was tough for retailers. The so-called golden quarter was far from sparkling and it’s clear that it failed to deliver what many businesses wanted.

Black Friday, which came late this year, really has shifted the pattern of spending, with sales simply being pulled forward instead of boosting overall spending.

Despite wages now rising faster than inflation, and healthier household finances overall, retail isn’t getting its share of spending from disposable income that it once did.

But amid the gloom, some retailers have done well by giving customers what they want as well along with selling the right products at the right price.

Household goods and fuel were the only sectors that saw an increase. Online sales accounted for 19% of December’s retail spending, up from 18.6% the previous month.

Last week, the British Retail Consortium said 2019 had been the worst year for retailers since 1995.

“The picture we’re seeing from trading figures is that shoppers reined in spending in the months ahead of Christmas, with the December monthly figure showing there was no festive bounce to make up for lost ground,” said Ed Monk, associate director for personal investing at Fidelity International.

At the same time, Andrew Carlisle, managing director and UK retail consulting lead at Accenture, struck a more optimistic note. “While these figures won’t dispel concerns around the challenging UK retail climate, the picture is not all doom and gloom,” he said.

“Consumer confidence rose to its highest since July last month, showing there could be better times ahead in 2020. Retailers will be hoping that an economic bounce and regulatory relief will see an upturn in fortunes.”

But Capital Economics’ UK economist Thomas Pugh said the figures added to worries about growth following this week’s weak gross domestic product figures for November.

“December’s outright fall in retail sales, despite a boost from the lateness of Black Friday, does not bode well for GDP growth in December and could nudge the MPC yet closer still to cutting rates at the end of the month,” he said. A fall in inflation has also raised expectations a rate cut in on the cards.

After the retail sales data was released, the pound reversed earlier gains and edged lower, another signal that the financial markets are expecting a rate cut.

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