Retail sales record biggest monthly fall since the EU referendum as move to online spending continues
UK retail sales fell by 1.5% in December compared with November, the biggest monthly fall since the EU referendum, official figures show.
The Office for National Statistics (ONS) said many shoppers had shifted spending to November to take advantage of Black Friday offers. It comes as Carpetright and clothing chain Bonmarche were the latest retailers to report a tough Christmas.
A squeeze on consumer spending also led to a difficult December for UK shops.
Debenhams, Marks and Spencer, House of Fraser, and Mothercare were among the other High Street retailers which reported a decline in sales. Inflation has been outstripping increases in wages, denting the spending power of shoppers.
For 2017 as a whole, the quantity bought increased by 1.9%, which was the lowest annual growth since 2013.
This picture was underlined on Friday when trading updates from Carpetright and clothing chain Bonmarche unsettled investors enough to prompt big share price falls.
Carpetright issued a profit warning amid a “sharp deterioration” in UK trade, sending its shares down by almost a half. Bonmarche shares sank by a quarter after it said like-for-like sales at its stores dropped nearly 10% in the last three months of 2017.
The ONS said that the trend towards online spending was continuing, and that almost one in five pounds was now spent online. It also predicted that retail sales would contribute almost nothing to economic growth in the last three months of 2017.
Chris Williamson, chief business economist at IHS Markit, said: “The data add to signs that rising prices and stubbornly weak pay growth continue to erode consumer spending power and will act as a drag on the economy in 2018.”
The 1.5% monthly decline in retail sales volume in December was the biggest since June 2016, according to the ONS.
Ben Brettell, senior economist, at stockbrokers Hargreaves Lansdown, said that year-on-year retail sales rose by 1.4% in December, but that was lower than the 3% jump predicted by analysts.
“But there could be some light at the end of the tunnel,” he added, amid signs that wage growth is picking up and inflation may have peaked.