Shock Christmas retail sales fall

Retailers suffered a worse Christmas than feared after official figures today showed a surprise drop in volumes in December. Retail sales fell 0.1% between November and December.

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Online 'strongest sector' amid high street fall

December's drop in the official measure of UK retail sales volumes confirms that the festive period was fairly lacklustre for the high street.

The 0.1% monthly fall was a bit worse than the consensus forecast of a 0.2% rise and left sales barely higher than a year ago. Sales in Q4 as a whole were down by 0.6% - yet another bit of evidence that the economy probably contracted at the end of last year.

Online sales were unsurprisingly the strongest performing sector. Clothing did OK too. But food, department store and household goods sales all dropped. At least the sales period at the start of January has reportedly been reasonably strong. And growth of the retail sales deflator in December was broadly steady - supporting other evidence that retailers held back from any panicked price discounting and so preserved their margins.

Nonetheless, with consumers real pay still falling, demand on the high street is unlikely to improve in the foreseeable future.

– Vicky Redwood, Capital Economics


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