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United Kingdom Retail December 2023

United Kingdom: Retail sales record largest decline in two years in December

Retail sales slid 3.3% in month-on-month seasonally adjusted terms in December, which contrasted November’s 1.5% increase. The result marked the worst reading since January 2021, and was far below market expectations of a 0.5% drop. Food and non-food stores sales contributed the most to December’s decline, followed by non-store retailing and fuel sales. December’s sharp decline was partly due to consumers front-loading Christmas shopping to take advantage of Black Friday sales in November.

On an annual basis, retail sales fell 2.5% in December, which was notably below November’s 0.3% expansion. Meanwhile, the trend improved, with the annual average variation of retail sales coming in at minus 2.9% in December, up from November’s minus 3.0%.

The reading increases the chances that the economy contracted in Q4 as a whole, though the December retail data should be interpreted with caution given past volatility in the series.

Nomura analysts said:

“With the official data in particular (and surveys too for that matter) having a history of sizeable monthly volatility we should be wary about the takeaways from [the latest retail] figures. Rather, we should be in a better position to judge the state of the retail sector over Christmas by the time the January official sales figures are published in a month’s time.”

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