Retail sales suffered a “cliff edge” fall in December, increasing the chances that Britain suffered a mild recession in the second half of last year.
Sales volumes are estimated to have dropped 3.2%, the biggest monthly decline since January 2021 when Britain weas still under Covid lockdown restrictions.
It follows a relatively strong November suggesting that many consumers did much of their Christmas shopping during the Black Friday discounting bonanza and held back during the the final run up the festive break.
The fall makes it more likely that the economy was in negative territory over the fourth quarter of the year. GDP fell by 0,1% in the third quarter followed by a month drop of 0.3% in October and a 0.3% bounce in November. Economists say December’s GDP figure - which will be revealed in February - would have to be strong for the fourth quarter as a whole to be positive. Today’s poor retail sales data from the Office for National Statistics suggests that consumer confidence was weak after a year of a squeeze on living standards.
Non-food store sales volumes fell by 3.9% , following a 2.7% increase in November Black Friday discounting, increased sales.
Food store sales volumes fell by 3.1% in December 2023, from an increase of 1.1% in November 2023.
On an annual basis, sales volumes fell by 2.8% in 2023 and were their lowest level since 2018.
Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, said: “Retail sales volumes ended the year on a sour note, registering the largest monthly decline since January 2021.
“Partly, this is because UK consumers did their Christmas shopping early this year. Nevertheless, December’s decrease was much worse than expected and suggests pressure on the UK consumer may be intensifying.
“Results from retailers themselves over Christmas paint a very mixed picture. The supermarkets fared reasonably well, as did Next and M&S. But sales from the likes of JD Sports and Superdry have been very disappointing. This suggests UK consumers are becoming more choosy about where to spend their money.”
Jacqui Baker, head of retail at consultants RSM UK and chair of ICAEW’s Retail Group, said: “After a slight uptick in November, we’ve seen the biggest fall this year in December, marking a shocking end to the Golden Quarter.
“Black Friday tempted some consumers to bring forward their spending to November, but ongoing cost-of-living pressures meant most households cut back across all retail categories. This meant retailers were forced to prolong their heavy discounting into December to shift stock which will have been a big hit to margins.
