FX.co ★ UK Retail Sales Rise Less Than Forecast

Retail sales in the UK showed growth for the first time in three months during November, but this growth was slower than expected due to consumer caution responding to the government's first budget. Despite the festive season, surveys highlighted a modest decrease in retail sales for December, with predictions of a further fall in January.

According to the Office for National Statistics, retail sales volumes increased by 0.2% in November, a positive shift from the 0.7% fall in October. However, this growth was understated, as a 0.5% increase had been predicted. Sales, excluding auto fuel, experienced a 0.3% growth on the monthly scale, counteracting the 0.9% decline witnessed a month before. Predictions for November had suggested no growth.

Some retailers attributed sales growth to Black Friday offers. Food store sales volumes increased for the first time in three months, showing a 0.5% increase in November, primarily in supermarkets. Non-food store sales volumes, comprising department stores, clothing outlets, household and miscellaneous non-food stores, demonstrated a 0.2% increase. On the other hand, automotive fuel sales plummeted by 0.7%.

Yearly retail sales growth declined to 0.5% from 2.0% in October. When auto fuel was excluded, growth in sales volume fell to 0.1% from 1.6%. Throughout the three months leading to November, sales volume saw a mere 0.3% surge in comparison to the previous three months.

Elsewhere, the Confederation of British Industry's Distributive Trades Survey underlined that the retail sales balance improved slightly to -15% in December from -18% in November. Regardless, sales underwent their third consecutive monthly fall. Around 11% of retailers anticipate sales to further decrease in January, while approximately 18% predict sales volume to rest beneath January’s typical averages.

Internet sales volume also witnessed a deflation in December, with the relevant balance dropping to -8% from -12% in November. About 6% of respondents anticipate growth in online sales in the following month.