UK retail sales fall by 0.4% in November as a result of the cost of living crisis

UK retail sales unexpectedly fell in November as the cost of living crisis hit household finances and consumer confidence.

The volume of UK retail sales fell 0.4 per cent between October and November, according to data published by the Office for National Statistics on Friday.

Economists polled by Reuters had expected an increase of 0.3 percent.

Darren Morgan, ONS director of economic statistics, said: “Retail sales fell overall in November, driven by a notable drop in online shopping, with Black Friday deals failing to provide their usual boost in this sector.”

Sales in non-food stores and for fuel also fell in the month, with only food sales showing an increase. Morgan said consumers were “stocking up early to try to spread the cost of Christmas festivities”.

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Lynda Petherick, head of retail at Accenture UK, said that not even the World Cup and Black Friday Christmas shopping could boost sales “will come as a huge disappointment to retailers”.

“The sector continues to struggle with rising costs, which are now further exacerbated by weather, travel and supply disruptions,” she added.

Separate data published on Friday by research firm GfK showed British consumer confidence remained below minus 40 for an eighth consecutive month in December, the longest period of extreme pessimism in the survey’s history in almost half a century.

Both figures raise concerns that the economy has entered a prolonged recession. UK GDP fell in the third quarter, and weakness in consumption suggests it may also fall in the final three months.

Thomas Pugh, economist at consultancy RSM UK, predicted UK household disposable income would fall by 2.5 per cent next year, the biggest fall on record, pushing the economy into a year-long recession.

In the less volatile measure of the three months to November, sales volume was down 2.2 per cent compared with the previous three months, continuing the downward trend since Covid restrictions were eased last spring.

The amount of goods sold in November was 0.7 percent below pre-pandemic levels in February 2020. Buyers, however, spent 14.8 percent more to reveal the effect of rising prices on households.

Consumer inflation eased only to 10.7 percent last month from a 41-year high of 11.1 percent in October, according to official data released earlier this week.

Olivia Cross, UK economist at Capital Economics, said that “high inflation will lead to a further fall in household real disposable income of 1.1 per cent in Q4 2022, which will keep sales volumes down in December”.

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