A DIRE Christmas on the high street was revealed yesterday, with official figures showing the worst December sales performance since 2010.
Retail sales fell 1.5 per cent month-on-month, according to the Office for National Statistics (ONS), a much heavier decline than economists had forecast.
The figures also marked the biggest month-on-month fall since June 2016, when the UK voted to quit the European Union.
Annual growth fell to 1.9 per cent for the whole of 2017, well below expectations and the weakest rate of growth since 2013.
Consumer confidence has tanked since the referendum as Brexit-fuelled inflation erodes spending power and jacks up prices for shoppers already struggling with stunted wage growth.
Black Friday, which falls in November, has also meant people are doing Christmas shopping early, denting December sales figures.
ONS senior statistician Rhian Murphy said: “Consumers continue to move Christmas purchases earlier with higher spending in November and lower spending in December than seen in previous years.
“However, the longer-term picture is one of slowing growth, with increased prices squeezing people’s spending.”
The likes of Carpetright, Mothercare and Debenhams have all issued profit warnings this month after Christmas trading fell short of expectations.
Retail sales volumes slumped 1.5 per cent month-on-month in December after jumping one per cent in November, when they were lifted by squeezed consumers being keen to take advantage of Black Friday promotions. Retail sales volumes were up just 1.4 per cent year-on-year in December.
Non-food sales fell 1.3 per cent month-on-month in December, with a particularly sharp drop in household goods. Volumes were up 1.7 per cent year-on-year. Food sales fell 1.1 per cent month-on-month and 0.6 per cent year-on-year in December.
While economists expect inflation to cool this year from its current three per cent, and wage growth to pick up, political uncertainty is likely to mean that the retail sector remains under intense pressure.
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.
“However, employment growth is likely to be modest at best in 2018, while consumer confidence may well remain fragile amid significant economic, political and Brexit uncertainties.
“Meanwhile, lenders are becoming less prepared to make unsecured credit available to consumers and they are also tightening their lending standards.
“Consumer confidence fell to a four-year low in December with consumers concerned not only about the squeeze on their purchasing power but also the economic situation and outlook.
“Consumers were also seemingly unsettled by the interest rate hike in November.
“The main support for consumer sending has come from high (and until recently rising) employment — although this has lately suffered a modest relapse with a drop of 56,000 in the three months to October.”
“The squeeze on consumers remains appreciable at the start of 2018, but it should progressively ease during the year as inflation falls back and pay gradually picks up.”
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