Despite the festive season, UK retail sales unexpectedly declined in December and consumers turned more pessimistic at the start of this year as the rising cost of living and the slowing economy hurt their purchasing power.
The retail sales volume logged a monthly fall of 1.0 percent after easing by a revised 0.5 percent a month ago, data published by the Office for National Statistics revealed Friday.
This was in contrast to economists’ forecast for a 0.5 percent increase and marked the second consecutive contraction.
Excluding auto fuel, retail sales decreased 1.1 percent, which was bigger than November’s 0.3 percent fall. Sales were expected to rise 0.4 percent.
Food store sales decreased 0.3 percent as customers stocked up early for Christmas. Reflective of high cost of living, consumers cut back their spending on non-food stores. Non-food sales slid 2.1 percent in December.
Early Friday, the survey conducted by the market research group GfK showed that the consumer confidence index unexpectedly fell to -45.0 in January from -42 in December. The score was seen at -40.0.
With inflation continuing to swallow up pay rises, and the prospect of some shocking energy bills landing soon, the forecast for consumer confidence this year is not looking good, GfK’s client strategy director Joe Staton said.
Read more: UK Jobless Rate Unchanged, Wage Pressures Rise Further
On a yearly basis, overall retail sales declined 5.8 percent, following a 5.7 percent drop in November and also larger than the 4.1 percent expected fall.
Excluding auto fuel, the annual fall in retail sales deepened to 6.1 percent from 5.6 percent in the previous month. Economists had forecast a 4.4 percent drop for December.
In the three months to November, retail sales volume decreased 5.7 percent from the previous year.
In 2022, retail sales volumes fell 3.0 percent in contrast to an increase of 5.2 percent in 2021. Falls in non-store retailing and food stores drove the decrease in retail sales in 2022.
Read more: UK Economy Unexpectedly Expands In November
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