UK shoppers cut back on spending as inflation takes its toll

LONDON - Inflation-pinched British consumers cut their shopping by the most in the key month of December in at least 25 years, official data showed on Friday, dashing hopes for a Christmas boost for the country's flagging retail sector. Sales volumes were down by 5.8% compared with December 2021, the biggest fall for that month in records going back to 1997, and the ninth month in a row that they fell in annual terms. Sales unexpectedly fell by 1% from November, the Office for National Statistics said, confounding a forecast for a 0.5% monthly increase in a Reuters poll of economists. Sterling fell against the U.S. dollar and the euro. Olivia Cross, with consultancy Capital Economics, said the surprise fall suggested that some of the resilience seen in the economy in late 2022 petered out in December. "What's more, we think the bulk of the drag on activity from high inflation and rising interest rates has yet to be felt," she said. A survey showed a first drop in three months in consumer confidence in January which fell back close to its lowest level since at least 1974. Britain's economy is widely expected to fall into a recession. Retail sales volumes fell by 3.0% in 2022, their worst full-year performance since at least 1997. Heather Bovill, ONS deputy director for surveys and economic indicators, said food sales had risen in November as shoppers stocked up early for Christmas, but they fell again in December with supermarkets linking the drop to the rising cost of living. Food sales fell by 0.3% in December after a monthly rise of 1.0% in November. Non-food stores sales volumes fell by 2.1%. In terms of value, overall spending was down by a month-on-month 1.2% from November. GROWTH PLAN On Thursday, Bank of England Governor Andrew Bailey sounded a more hopeful note, saying recent falls in inflation were "the beginning of a sign that a corner has been turned." Nonetheless the BoE is expected to raise interest rates for a 10th time in a row on Feb. 2. Helen Dickinson, chief executive of the British Retail Consortium, said retailers and customers still faced cost pressures but the situation would improve in the second half of 2023. Christmas trading updates from Britain's biggest retailers, including Tesco, Sainsbury's and Marks & Spencer, were better-than-expected with shoppers returning to stores at the expense of online a key trend. The ONS said online sales fell in December with strikes by postal workers a factor. Online retailer Boohoo reported an 11% revenue drop over Christmas, hurt by the strikes. The increased cost of living hit higher-end retailer Ocado in results announced earlier this week. Tesco's chairman, John Allan, said Friday's figures underscored the need for a long-term economic growth strategy. "What we'd love to see from government is a really serious, thought-through, long-term growth plan," Allan told BBC radio. (Additional reporting by James Davey and William James; Editing by Kate Holton, Tomasz Janowski and Toby Chopra)

UK shoppers cut back on spending as inflation takes its toll

DISCOVER MORE

Portugal's rents hit record high amid cost of living crisis

Nuclear row looms over EU renewable energy talks

Britain moves ahead with plan to house migrants in military bases

Spanish PM seeks international image with China visit

UK's Hunt: Truss plans showed borrowing can't fund tax cuts

Poland to boost ammunition production, says PM

Humza Yousaf sworn in as Scotland's leader as bid for unity falters

UK extends probe into chip-maker Broadcom buying VMware

Five African cities hold more than 50% of continent's private wealth

AI may affect 300mln full-time jobs: Goldman Sachs

UAE approves 24 national initiatives to double re-export industry

BP and UAE's ADNOC bid for stake in NewMed Energy

UAE banking sector to remain stable in 2023 – KPMG

Britain's Next stays cautious on outlook after profit rise

British retail sales rebound despite cash-strapped consumers

British retail sales rise 1.2% in February

Britain's Tesco beats rapid delivery rollout target

Some UAE retailers increase prices of eggs, poultry

LATEST VIDEO

VIDEO: Why is China's Belt and Road Initiative facing setbacks?

ZAWYA COVERAGE

Middle East, Asia-Pacific airfares surge 53%, pose threat to recovery of aviation sector - ACI

DP World develops edible oil terminal at Port of Berbera

Maldives airport temporarily shut down after Flydubai aircraft suffers tire burst on landing

Real GDP growth in the GCC region will slow to 3.5% in 2023

DFM introduces 'Omnibus Accounts' to enhance market access

Portugal's rents hit record high amid cost of living crisis

Egypt to raise allocation for food subsidies by 20% in FY 2023/24 draft budget

IMF and Seychelles reach over $100mln staff-level agreement

Nuclear row looms over EU renewable energy talks

THE BRI REPORT

China is reshaping the Belt and Road Initiative ahead of a post-pandemic era

DISCOVER MORE

LATEST VIDEO

ZAWYA NEWSLETTERS

ZAWYA COVERAGE