British retailers reported a surprise pick-up in demand in December, but expect spending to slide again in 2023 as shoppers are pressured by the rising cost of living, a survey from the Confederation of British Industry has shown.
The CBI's distributive trades index, which measures the difference in the percentage of retailers reporting annual rises and falls in sales volumes, rose to +11 in December from -19 in November. This was well above both the -21 forecast by retailers last month and the -23 median in a Reuters poll of economists.
However, for January retailers see the sales balance falling back to -17.
"Any festive cheer is expected to be short-lived. Retailers are bracing themselves for the chill winds that will blow through the sector this winter, with consumer spending set to be hit hard by high inflation," CBI economist Martin Sartorius said.
A separate CBI measure, which asks retailers to compare sales with what is normal for the time of year, showed readings around average for November, December and January.
Late In 2023
British consumer price inflation edged down from October's 41-year high of 11.1% in November, but the Bank of England expects it to remain high over the coming months and only start to fall significantly later in 2023.
Official retail sales data for November showed retail sales volumes excluding fuel were 5.9% lower than a year before.
The CBI's survey of 50 retail chains took place between Nov. 24 and Dec. 12.