Published: Fri, January 19, 2018
Money | By Armando Alvarado

United Kingdom retailers see Black Friday hangover as sales plunge

United Kingdom retailers see Black Friday hangover as sales plunge

Retail sales fell 1.5pc month on month, according to the Office for National Statistics, a much heavier decline than economists had forecast.

There is also a £200-a-week spending gap between households across the United Kingdom, reflecting varying incomes and costs.

The figures also marked the biggest month-on-month fall since June 2016, when the United Kingdom voted to quit the European Union.

"Consumers continue to move Christmas purchases earlier with higher spending in November and lower spending in December than seen in previous years".

Purchases previously made in December are being brought forward, and retailers complain the pressure to keep prices low is damaging margins at the most crucial time of the year. Sales were expected to fall 1 percent.

For the whole of 2017, the quantity bought in retail sales increased by 1.9%; the lowest annual growth since 2013.

The likes of Carpetright, Mothercare and Debenhams have all issued profit warnings in January after Christmas trading fell short of expectations.

Only department stores saw an improvement, with sales rising 0.6%.

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Commenting on the figures, Stephen Clarke, policy analyst at the Resolution Foundation, said: "Today's figures confirm that families largely shrugged off any immediate post-EU referendum jitters and went spending".

Ruth Gregory at Capital Economics said that, given the volatility in the data around this time of year, it was hard to get a clear picture of underlying growth.

It also predicted that retail sales would contribute nearly nothing to economic growth in the last three months of 2017.

On a quarterly basis, the growth in sales volumes was 0.4 per cent, the weakest rate seen since the beginning of 2017, when volumes fell by 1.2 per cent.

Total retail sales were therefore up 1.4% on December the previous year compared badly with the 2.6% estimate and the prior month's 1.5% gain.

The ONS said that the trend towards online spending was continuing, and that nearly one in five pounds was now spent online.

The Bank of England, which is considering when to follow up on November's first rate hike in a decade, expects the squeeze will ease in 2018 as inflation cools and wage growth ticks higher.

"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.

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