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UK retail sales slightly below expectations in December -UPDATE

Date: Friday 20 Jan 2012

UK retail sales slightly below expectations in December -UPDATE

The volume of retail sales in the United Kingdom rose by 0.6% on the month (2.6% on the year) in December, according to the latest data from the Office for National Statistics.

The consensus estimate was for a month-on-month increase of 0.6%.

However, the on-year rate of change for November has been revised down, to show a 0.4% pace of expansion, versus the 0.7% previously estimated. November’s monthly percentage variation, on the other hand, has been revised up and now shows a fall of 0.5% (from -0.8% before).

Excluding fuel, retail sales increased by 0.6% on the month (1.7% on the year); but the year-on-year growth rate for November has also been revised down, to a flat reading instead of the 0.5% previously calculated.

Sales volumes in December were driven predominantly by automotive fuel and textiles, with sales at clothing and footwear stores increasing by 11.2% and 6.3% respectively from December 2010, which was impacted on by harsh winter weather.

Offsetting the growth in sales volumes above were household goods stores and other stores, where sales decreased by 3.6% and 1.9% respectively.

Commenting on the data after its release economists at Barclays Capital are commenting that, “retail sales data for December were broadly in line with expectations indicating a reasonably buoyant Christmas, although November data was revised down(…)

“Today's data indicate that trading during the Christmas period was not as bad as retailers feared, although some heavy discounting towards the end of the month would have helped these volumes figures. However, we do not think this pace of increase will be sustained in the coming months given the cautious mood of British consumers and the fact that they are experiencing the most severe real income squeeze in decades. We expect consumer spending to remain subdued at the beginning of this year and to gradually gain momentum towards the end of the year as inflation abates and the squeeze on real earnings eases.“

AB

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