Surprise fall in UK retail sales last month

Friday 18th December 2009

UK retail sales saw a surprise fall last month, according to figures released today from the Office of National Statistics (ONS).

The news divided economists, with some saying sales for Christmas could still be good, while others said they exemplified the fragility of consumer confidence.

Sales were down 0.3 per cent, compared to a rise of 0.6 per cent in October. The ONS said the fall had been largely due to a fall in sales of non-specialist retailers.

However, the value of retail sales in November 2009 was 2.7 per cent higher than in the same month a year earlier.

Reacting to the news, Richard Lim, British Retail Consortium (BRC) economist, said: "Growth was weaker than a strong October but that’s largely due to the amount spent on food going up more slowly as customers benefit from food prices rising more slowly.

"November's mild weather hit clothing sales. Of course, that will all have changed as temperatures plummeted this week.

"Consumer confidence can't be taken for granted but generally customers are feeling more positive than a year ago.

"Worries remain for the new year - about jobs and taxes in particular - but most retailers are now reasonably sure of a better Christmas than last year's dire performance."

However, Travelex has been less positive about the results today. Mark Bolsom, head of UK trading desk at Travelex, said: "All data coming out of the UK is so mixed at the moment that this specific news won’t have a disastrous impact on Sterling.

"Retail sales figures were disappointing because consumer confidence is still very fragile. Not only is the UK the last major economy left in recession, the prospect of tax increases and public spending cuts have left the public feeling exposed."

The ONS data showed the first time the value of total monthly sales had failed to increase for six months. Duncan Higgins, senior analyst at Caxton FX said: "The figures this morning will come as a real blow to hopes of a stable recovery.

"Last month sales had shown a marked improvement, but with sales down significantly this month, questions will again be raised over the effectiveness of current policy. Clearly credit conditions in the UK are still tight, and consumers are not yet confident enough in their economy to resume traditional spending habits."

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