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UK: Official retail figures reveal shock fall in volumes during December

09:56 18 January 2013

Official data on December retail sales is due to be published today

Official data on December retail sales is due to be published today

BRITAIN’S retailers suffered a worse Christmas than previously feared, official figures indicated today, with data showing a surprise drop in volumes in December.

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The Office for National Statistics (ONS) said retail sales volumes fell 0.1% between November and December, in contrast with predictions from economists of a return to growth of around 0.2%.

They follow a lacklustre performance in November, when sales were flat, following a shock 0.8% drop in volumes in October.

The unexpected further decline last month will fuel fears that the economy contracted in the final quarter of last year, with recent surveys having already show manufacturing, construction and non-retail services coming under pressure.

Today’s figures also indicate particularly bad news for high streets, indicating that non-store retailing volumes grew 1.6% month on month, and accounted for 10.6% of all retail sales in December.

The British Retail Consortium recently said internet sales were up 18% during December but that overall it had been an “underwhelming” month for retailers, with overall like-for-like sales edging up just 0.3%.

Vicky Redwood, chief UK economist at Capital Economics, said: “December’s drop in the official measure of UK retail sales volumes confirms that the festive period was fairly lacklustre for the high street.

“The 0.1% monthly fall was a bit worse than the consensus forecast of a 0.2% rise and left sales barely higher than a year ago. Sales in Q4 as a whole were down by 0.6% - yet another bit of evidence that the economy probably contracted at the end of last year.

“Online sales were unsurprisingly the strongest performing sector. Clothing did OK too, but food, department store and household goods sales all dropped.

“At least the “sales” period at the start of January has reportedly been reasonably strong. And growth of the retail sales deflator in December was broadly steady, supporting other evidence that retailers held back from any panicked price discounting and so preserved their margins.

“Nonetheless, with consumers’ real pay still falling, demand on the high street is unlikely to improve in the foreseeable future.”

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