Shoppers cut back on Xmas as sales fall for record fifth month

Retail sales fell for a record fifth month in a row in December, as shoppers continued to be cautious in the run-up to Christmas.

The Office for National Statistics (ONS) reported that sales volumes fell by 0.6% on the previous month.

Economists, many of whom had been tipping a “Boris bounce” for consumer confidence after the Conservatives’ election win, had predicted a rise of 0.5%.

:: Inflation tumbled to three-year low in December

The statisticians said December represented the worst performance in monthly terms since records began in 1996.

A view of the shops along the main street of Chester, an area which will receive funding
Image: Visits to high street shops remained muted in December

It meant sales growth, on an annual basis, slipped to 0.9%.

In value terms, the amount spent in December was 0.3% down on November – suggesting Black Friday events were better supported.

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The data showed clothing and footwear volumes down 2% with department stores – that were already under significant pressure – and food shops seeing falls of 1.8% compared with November.

The bleak picture was greeted with dismay by financial markets – the pound slipping more than half a cent against the dollar to $1.3057 as investors saw the latest data as bolstering the chance of a Bank of England interest rate cut at the end of the month in a bid to boost activity.

ONS head of retail sales, Rhian Murphy, said: “Retail sales fell sharply in the latest three months with almost all sectors showing a decline.

“The longer-term picture is still one of growth, although it has slowed considerably in recent months.

“December was the fifth consecutive month with no growth as food stores suffered particularly poor sales, showing the steepest fall for three years.”

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Sainsbury’s chief executive, Mike Coupe, tells Ian King about sales for the supermarket chain and Argos over Christmas.

The data supports what retailers themselves had been reporting following the conclusion of the festive season.

Spending on leisure and experiences appeared to pick up though listed retail chains exposed to the high street saw shopper numbers largely decline.

While business and housing market surveys have pointed to a release of pent-up demand since the election result was declared, other consumer-linked figures have proved disappointing.

At least five members of the Bank’s monetary policy committee (MPC) have talked publicly about the need for, or likelihood of, a rate cut to support a below-potential economy.

Ahead of its next policy meeting on 30 January, Bank governor Mark Carney said a “prompt” cut may be needed without evidence of a bounce in activity.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, described the retail sales figures as a “major shock”.

“These data undoubtedly strengthen the case for the MPC to cut Bank Rate on January 30”, he added.