UK Retail Sales Decline At Fastest Pace In 11 Months

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UK retail sales declined more-than-expected in December as the Omicron outbreak dampened Christmas sales, data from the Office for National Statistics showed Friday.

Retail sales fell 3.7 percent on a monthly basis in December, reversing the 1 percent increase a month ago. Sales were forecast to fall 0.6 percent. This was the biggest decline since January 2021.

Likewise, sales volume excluding auto fuel, decreased 3.6 percent after rising 0.7 percent in November. This was also much bigger than the economists' forecast of -0.5 percent.

Still retail sales were 2.6 percent higher than their pre-coronavirus February 2020 levels.

Following strong sales in November, non-food store sales declined sharply by 7.1 percent and food-store sales were down 1.0 percent from the previous year.

Automotive fuel sales volumes fell 4.7 percent in December as increased home working in December reduced travel.

Year-on-year, retail sales volume decreased 0.9 percent, in contrast to the 4.3 percent increase seen in November and the economists' expectations +3.4 percent.

Excluding auto fuel, retail sales were down 3 percent, reversing the 2.2 percent increase in the prior month. Economists had forecast an annual fall of 1.1 percent.

With encouraging signs that the Omicron outbreak has passed the worst and the 'Plan B' restrictions due to be lifted next week, retail sales may recoup a bit of this fall in January and probably all of it by February and March, Bethany Beckett, an economist at Capital Economics, said.

December's UK retail sales plunge looks a lot like a post-Black Friday pullback, even if Omicron has had some effect too, James Smith, an ING economist said. Still, the outlook for retail this year looks tricky, as the ongoing rotation back to services continues and disposable incomes are squeezed.

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