There was a surprise contraction in retail sales in December, although this month is key for many retailers due to Christmas shopping, according to official figures.
Retail sales fell by 0.3% last month, according to the Office for National Statistics (ONS).
No decline was expected, including a drop of 0.3%. Economists forecast sales growth of 0.4%.
These figures are important because they measure household consumption, the single largest expenditure in the UK economy.
Low household consumption can make economic growth more difficult to achieve. The government has repeatedly stated that growth is its top priority.
Who did well and who didn’t?
December’s decline was due to a “very poor” month for food sales, which reached their lowest level since 2013, particularly penalizing supermarkets, the ONS said.
The data contrasts with reports from the supermarkets themselves, which show excellent Christmas trading.
This suggests that smaller buyers were hit hardest by the decline.
Clothing and homewares stores had a better month and reported strong Christmas trading, it added.
These retailers have bounced back fall in recent months.
The ONS also revised downward November retail sales growth. Rather than growth of 0.2% in a period of Black Friday discounting sales, sales increased by only 0.1%.
What does he say about the economy?
When the data is not seasonally adjusted to account for the Black Friday drop later last year, a brighter picture emerges.
“Our figures, not adjusted for seasonal spending, show that overall retail sales rose more strongly than last December,” said Hannah Finselbach, senior statistician at the ONS.
Behind the overall figure lies more positive news, sales volumes excluding gasoline increased by 2.9% compared to December 2023.
It caps a week of news that paints a mixed picture of the economy.
Even though prices are increasing at a slower pace than expected, overall growth is weaker than expected.
Friday’s data means it is now more likely that the economy stagnated in the final three months of the year.
Analysts at Pantheon Macronomics said these statistics increase the risk of a slight decline in GDP during the quarter.
No growth was already registered from July to September, the ONS said.