UK retail sales decline in December

Seasonally adjusted figures released on Friday show that UK retail sales fell from November to December.

According to the Office for National Statistics (ONS), the quantity bought in retail sales increased by 4.3% compared with December 2015 but decreased by 1.9% compared with November 2016.

This was the biggest monthly drop for more than four and a half years, but the underlying trend remains one of growth: across the final three months of the year, retail sales were up 1.2%.

“That will buoy hopes that consumers still managed to support a solid pace of overall economic growth in the fourth quarter,” the Guardian reported.

Commenting on the figures, ONS senior statistician Kate Davies said: “Retailers saw a strong end to 2016 with sales in the final quarter up 5.6% on the same period last year, although the amount bought fell between November and December once the effects of Christmas are removed.

“There were some notably strong figures from smaller retailers, in particular butchers, who reported a significant boost in sales in the run up to Christmas.”

Overall, small businesses saw a 17.4% increase in sales compared with December 2015.

The ONS report also added to signs that prices in the shops are rising. Average store prices in December increased by 0.9% year-on-year and by 0.1% for all retailing excluding fuel prices — the first increase since June 2014.

Highlighting the risks of rising prices, Alan Clarke, an economist at Scotiabank, said that inflation figures earlier this week showed that prices rose more than expected in December, “and now we also know that sales volumes fell”.

This pattern looks set to continue in 2017, he suggested, with higher prices reducing disposable income and holding back consumer spending growth.