LONDON, Dec 16 (Reuters) – British retail sales unexpectedly fell in November despite the men’s World Cup and Black Friday sales, showing the stress many households are facing as the cost-of-living crisis eats away at their finances.
In the latest warning sign that the UK economy may be heading into recession, retail sales fell 0.4% from October. A Reuters poll of economists showed a rise of 0.3%.
Sales rose 0.9% in October, compared with September, when sales were held back by a one-off public holiday to mark Queen Elizabeth’s funeral.
“It will be a huge disappointment for retailers if the World Cup and Black Friday Christmas shopping doesn’t lead to an increase in sales,” said Linda Petherick, UK head of retail at consultancy Accenture. and Ireland.
The Office for National Statistics (ONS) said some of the lower figures may reflect the exclusion of Cyber Monday online sales on November 28, which will be included in December’s figures.
Still, Friday’s readings were consistent with other signs that consumers are struggling. Retail sales fell 1.5% from pre-pandemic levels in 2019.
Earlier, market research firm GfK said British consumer confidence rose this month but was still close to an all-time low.
“EY ITEM expects pressures on household budgets to remain tight for the foreseeable future, with wage growth remaining well below inflation,” said Martin Beck, economist at the consultancy.
The latest readings for the British economy came a day after the Bank of England raised interest rates for the ninth time in a row and signaled that more hikes are possible.
But investors said the central bank may be nearing the end of its borrowing costs hike as inflation peaks and the economy looks set to enter recession.
Economist Olivia Cross of Capital Economics said that the drop in inflation from 11.1% in October to 10.7% in November will not bring relief to consumers.
“We doubt a sustained recovery in retail sales volume is in the pipeline,” Cross said. “We expect higher inflation to lead to a 1.1% decline in real household disposable income in Q4 2022, dampening December sales.”
Samuel Tombs, an economist at consultancy Pantheon Macroeconomics, said retailers could face a further drop in demand in December due to heavy snowfall this month.
Retail sales were 5.9% lower in November than a year earlier, the ONS said, a slightly sharper drop than forecast in a Reuters poll.
An ONS survey published on Thursday showed that one in six people in Britain are worried about running out of food, with many unable to stay warm in their homes.
Report by Andy Bruce; Edited by William Schomberg and Hugh Lawson
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