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(Picture: PA Archive)Britain’s retailers recorded an unexpected drop in sales in November as shoppers cut back in the run up to Christmas.
Official figures released by the Office for National Statistics on Friday morning showed a 0.4 per cent decrease in retail sales volumes for the month following a rise of 0.9 per cent in October.
Analysts had predicted a small rise of 0.3 per cent as consumers prepare for the festive period and took advantage of November’s Black Friday sales.
But ONS director of economic statistics Darren Morgan said: “Retail sales fell overall in November, driven by a notable drop for online retailers, with Black Friday offers failing to provide their usual lift in this sector.”
The disappointing figures suggest retailers will be in for an even tougher 2023 as the UK economy slides into a long recession and with the prospect of further interest rate rises.
On Thursday, the Bank of England lifted the base rate by 0.5 percentage points to 3.5 per cent - its highest level for 14 years - in an effort to tame inflation which is at 10.7 per cent.
The ONS said non-store retailing - which is predominantly online - fell by 2.8 per cent last month as people returned to shopping in store following the end of Covid lockdown restrictions.
Retailers suggested the impact of Royal Mail strikes and uncertainty over deliveries in time for Christmas may have persuaded shoppers not to shop online.
Food store sales volumes rose by 0.9 per cent, the ONS said, with some retailers suggesting this was because of customers stocking up early for Christmas in order to spread the cost.
Despite this monthly increase, sales volumes were 2.9 per cent below their pre-Covid levels.
The ONS added: “In recent months, supermarkets have highlighted that they are seeing a decline in volumes sold because of increased cost of living and food prices.”
Olivia Cross, Assistant Economist at Capital Economics, said a bounce back in retail sales next year was unlikely as people continued to feel the squeeze.
“The 0.4 per cent fall in retail sales volumes in November resumes the downward trend seen across most of the year.
“Sales volumes in November were 4.5 per cent lower than at the start of the year. And despite inflation probably having reached its peak, we think high prices will continue to keep retail sales volumes subdued.
“We doubt there is a sustained recovery in retail sales volumes in the pipeline. We expect that high inflation will drive further falls in real household disposable income of 1.1 per cent in Q4 2022, which will keep sales volumes subdued in December.”
James Daunt, Managing Director of books retailer Waterstones told BBC Radio 4’s Today programme: “It was a quiet November and we’ve come into frankly quite a quiet early start to December but some of that’s driven by obviously the economy and confidence but also by the calendar. We have a very long final week but ahead of us.
“Christmas, traditionally has always been very strong and much more resilient than at other times of the year. But I think most retailers are probably expecting 2023 to be a time to batten down and concentrate on the basics because it’s going to be tough.”
Mr Daunt blamed “higher interest rates, higher energy costs” for the suppressed sales numbers. He added: “People are having to spend their money on other things and there’s less disposable income.”
