UK retail sales fall 0.4% in November as cost of living crisis bites

British retail sales fell unexpectedly in November as the cost of living crisis hit household finances and consumer confidence.

The volume of retail sales in Great Britain fell 0.4 per cent between October and November, according to data published by the Office for National Statistics on Friday.

Economists polled by Reuters had expected a 0.3 per cent increase.

Darren Morgan, ONS director of economic statistics, 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.”

Sales in non-food stores and for fuel also dropped in the month, leaving only food sales showing an increase. Morgan said that consumers were “stocking up early to try to spread the cost of Christmas festivities”. 

Lynda Petherick, retail lead at Accenture UK, said the fact that not even the World Cup and Black Friday Christmas shopping could produce an increase in sales “will come as a major disappointment to retailers”.

“The sector continues to battle spiralling costs, which are now being exacerbated further by weather, travel and delivery disruption,” she added.

Separate data published on Friday by the research company GfK showed that UK consumer confidence remained below minus 40 for the eighth consecutive month in December, the longest period of extreme pessimism in the near half-century history of the survey.

Both figures fuel concerns about the economy having entered a prolonged recession. UK GDP fell in the third quarter and weaknesses in consumer spending suggest it may also fall in the final three months.

Thomas Pugh, economist at consulting company RSM UK, forecast that UK households’ disposable income would fall by 2.5 per cent next year, the biggest fall on record, pushing the economy into a year-long recession.

In the less-volatile measure of three months to November, sales volumes were down 2.2 per cent compared with the previous three months, continuing the downward trend seen since Covid restrictions were eased last spring.

The quantity of goods sold in November was 0.7 per cent below pre-pandemic levels of February 2020. Shoppers spent 14.8 per cent more, however, laying bare the impact of surging prices on households.

Consumer inflation only eased to 10.7 per cent last month from the 41-year high of 11.1 per cent in October, according to official data released earlier in the week.

Olivia Cross, UK economist at Capital Economics, said 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”.