UK retail sales volumes fall by 1% in December

According to the Office for National Statistics, volumes fell by 1%, more than the consensus estimate of 0.5%. This follows a 0.5% drop in November. 

Retail sales values, unadjusted for price changes, fell by 1.2% last month.

When compared with the pre-Covid level in February 2020, total retail sales were 13.6% higher in value terms, but volumes were 1.7% lower.

The value of the amount spent was 3.8% higher than in December 2021, but sales volumes fell by 5.8%.

“That is what inflation 5x the BoE target looks like,” said Michael Brown, market analyst at Trader X.

“Spend more, get less.”

UK retail sales rise 6.9% in December but headwinds loom

Sales volumes at non-food shops decreased by 2.1% month over month, reflecting ongoing retailer feedback and other wider evidence that households are reducing their spending due to rising prices and affordability issues.

Following a 1.0% increase in November, food shop sales volumes decreased by 0.3% in December, with some retailers suggesting that consumers stocked up for Christmas early.

Prior to Christmas, Royal Mail strikes encouraged more people to shop in-person rather than online.

Online sales as a percentage of total sales decreased to 25.4%, a 8.9% decrease from the prior year.

UK retail sales fall in November as cost-of-living bites household finances

Charlie Huggins, head of equities at Wealth Club, said:  “The real test for retailers will be what happens in 2023. Pressure on UK consumers is mounting and is likely to build in the coming months.” 

“With many people on fixed rate mortgages, the impact of interest rate rises has yet to be really felt. It is times like these that tend to sort the wheat from the chaff.”