July 31 2014 Latest news:
Friday, January 17, 2014
Britain’s high street stores enjoyed a bumper Christmas, official figures showed today, with retail sales climbing at their fastest rate for nine years in December.
The 5.3% increase year on year in sales volumes was the best since October 2004, while a 2.6% month-on-month hike also smashed expectations of a 0.2% rise.
It suggested a much-needed consumer spending splurge materialised during a make-or-break period following a dismal autumn for UK shops.
The data from the Office for National Statistics took experts by surprise, with Alan Clarke, of Scotiabank, describing it as a “boom” for the sector and “massively higher than expected”.
But the impact on overall UK growth figures for the fourth quarter looked likely to be limited given the slow performance from the sector during October and November .
There were also warnings that the aftermath of the Christmas spending spree could see shoppers take a breather at the start of the new year.
The figures come on the back of buoyant trading updates from the likes of Argos, Halfords, Primark and Next, although Marks & Spencer and Debenhams struggled.
Some retailers saw profit margins hit by a desperate wave of discounting to lure in last-minute shoppers.
The ONS said consumers spent £44.1billion, or £8.8bn a week, during December, around £300million a week more than a year earlier.
Internet sales increased 11.8% by value compared with the same month last year, with average weekly spending online at £675.4m.
Small stores employing less than 100 people did better, with the amount spent in them increasing by 8.1% as against 2.6% for larger stores, compared with December 2012.
But department stores grew sales volumes by 11.7%, marking the highest year-on-year growth since January 2000.
The month-on-month volume figure included an 8.7% rise for department stores, with a 2.4% increase for grocers and a 4.8% rise for non-store retailing, which includes internet-only as well as mail order businesses.
Economist James Knightley, of ING Bank, said the figures suggest the recovery is gaining speed and increase the chances of an interest rate hike as early as this year.
Howard Archer, of IHS Global Insight, said the surge, following a muted performance in October and November, indicated that many consumers left spending late in the hope of getting better deals.
He added that, despite inflation falling to a four-year low of 2%, the continuing squeeze on purchasing power amid low wage growth means the outlook for consumer spending is uncertain.
“It is very possible that consumers could take a breather after finally splashing out for Christmas and in the sales,” he said.