Retail sales take hit in December

According to the ONS, poor retail sales in December impacted on UK retail sales growth in Q4 2016, although overall consumers still spent strongly during the key October to December trading period.

Since the Brexit decision in June, it's been UK Shoppers who have been responsible for boosting the economy, whilst other growth areas such as investment and trade have gradually fallen behind.

ONS data released earlier today showed retail sales volumes declined 1.9% November to December, well below analysts forecasts and the single, biggest decline since April 2012. However, retail sales growth in the Q4 still stood at +1.2%, enough to make a 0.1% contribution to overall UK economic growth over the period. ONS statistician Kate Davies said "Retailers saw a strong end to 2016".

December can always be a volatile month-to-month picture and this year contrasts with a range of trading updates from major retailers who have in general painted a positive picture for the seasonal period. 

Earlier this week Governor of the Bank of England Mark Carney said he would keep a close eye on consumers, given consumption-led expansions were generally weaker than broader-based ones, as they often became dependent on ever-higher rates of borrowing.

A recent Reuters poll of economists suggested Britain's economy is likely to grow around 1.2% this year - around half the rate of 2016 - although it is not believed that the economy will fall into recession.

The ONS said sales across all types of retailers, covering a wide range of shops like pharmacies, books and garden shops - all fell in December.

The data release showed retail prices rose 0.9% in December compared with 2016, the largest increase in three years and adding to signs that the fall in the value of the pound since the Brexit vote is driving up inflation.

Source: ONS and Insight DIY.

Interested in the UK's latest economic data? Check out our Economic Data section and don't forget to sign-up for our weekly newsletter here.