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Retail

UK Consumer Spending Fails To Match Inflation In December: Surveys

By Steve Wynne-Jones
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UK Consumer Spending Fails To Match Inflation In December: Surveys

British consumer spending in December lagged inflation, representing a sizeable fall in real-terms expenditure, despite contributions from Christmas shopping and the men's soccer World Cup, new surveys have shown.

Barclays said spending on its credit and debit cards rose 4.4% in December compared with a year ago, a long way behind consumer price inflation which stood at 10.7% in November.

The comparison with last year was also flattered by the fact people in December 2021 cut back on social engagements as the Omicron variant of the coronavirus spread.

British Retail Consortium

Separately, the British Retail Consortium said retail sales in store chains rose by 6.9% in annual terms in December - also representing a decline when adjusted for inflation.

The surveys were in line with forecasts by most analysts that Britain's economy is now in a recession, and could stay there for some time.

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"Pubs, bars and clubs benefited from Christmas parties and football fans watching the World Cup," said Esme Harwood, a director at Barclays.

"However, it's worth noting that these figures look more positive in comparison to December 2021, as the spread of Omicron kept Brits away from high streets and hospitality venues."

IMRG Report

Separately, on Tuesday, a report from IMRG, an e-commerce trade body, showed December online sales fell 12% year-on-year, with performance for the week commencing Dec. 18 particularly hit by delivery disruption caused by postal workers strikes.

For 2022 as a whole, UK online retail sales fell 10.5% year-on-year - the first ever year of negative growth.

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IMRG said the conversion rate, or the percentage of site visitors who complete a purchase, was at times in 2022 20% lower than at the same times in 2021.

Barclays also noted weak online retail sales.

"The postal strikes hampered online retail due to fears of missing pre-Christmas delivery dates, while rising living costs caused more Brits to cancel their subscription services," Harwood said.

The latest Reuters poll of economists points to a 0.9% contraction for Britain's economy in 2023.

News by Reuters, edited by by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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