January 19, 2018 / 9:34 AM / 4 months ago

UK retail sales slide in December, capping tough year for consumers

LONDON, Jan 19 (Reuters) - British shop sales slid by much more than expected in December, capping off the weakest year for retail since 2013 as consumers squeezed by high inflation continued to keep a tight grip on spending.
    Retail sales volumes dropped 1.5 percent from November, the Office for National Statistics said, well below economists' forecasts in a Reuters poll for a monthly dip of 0.6 percent and more than reversing a 1.0 percent rise in November.
    That marked the biggest month-on-month fall since June 2016, the month Britons voted to leave the European Union, as well as the weakest December performance for seven years.
    "The longer-term picture is one of slowing growth, with increased prices squeezing people's spending," ONS statistician Rhian Murphy said.
    The ONS said many shoppers brought forward their Christmas spending into November to take advantage of Black Friday sales promotions. 
    Looking at the fourth quarter as a whole, which smooths out monthly volatility in the data, sales growth slowed to 0.4 percent, compared with 0.8 percent in the third quarter. 
    The ONS said retail sales will contribute almost nothing to economic growth in the last three months of 2017.
    Britain's economy slowed in 2017 as higher inflation - caused by the post-referendum fall in the pound - hurt the spending power of consumers, although forecasts for a bigger hit were confounded.
    The Bank of England expects the squeeze will ease in 2018 as inflation cools and wage growth ticks higher, although surveys of consumers suggest they do not share the central bank's optimism right now.   
 (Reporting by Andy Bruce and William Schomberg)
  
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