Longer-term picture of retail sales "is one of slowing growth" says ONS
Published: 22 January 2018 - Kiran Grewal
The Retail Sales Index from the Office for National Statistics (ONS) has shown that retail sales were boosted in the last three months of 2017, perhaps with credit being due to Black Friday sales.
The Retail Sales Index showed that in the latest three months the quantity bought in retail sales increased by 0.4% compared with the previous three months; while the underlying pattern remains one of growth, this is the weakest quarterly growth since the decline of 1.2% in Quarter 1 (Jan to Mar) 2017.
On the month, the quantity bought decreased by 1.5% when compared with strong sales in November 2017.
In December 2017, the quantity bought increased by 1.4% when compared with December 2016, with positive contributions from all stores except food stores.
For the whole of 2017, the quantity bought in retail sales increased by 1.9%; the lowest annual growth since 2013.
In non-seasonally adjusted terms, shopping for Christmas has shifted in recent years from being mainly in December to more in November as consumers seem to be starting their purchasing earlier in line with Black Friday promotions.
Internet sales continued to increase when compared with previous years, with physical stores dominating online sales growth in December.
Commenting on the official retail figures, ONS senior statistician, Rhian Murphy said: “Retail sales continued to grow in the last three months of the year partly due to Black Friday deals boosting spending.
"Consumers continue to move Christmas purchases earlier, with higher spending in November and lower spending in December than seen in previous years. However, the longer-term picture is one of slowing growth, with increased prices squeezing people’s spending.
"Over the year the proportion of internet spending is continuing to rise, with almost one in every five pounds spent online by the end of 2017.”
In response to the figures, head of retail insight and analytics at the British Retail Consortium (BRC), Rachel Lund said: "Today’s figures from the ONS reaffirmed the story of Christmas retailing, seen in BRC figures released last week. British consumers weren’t shy of spending over the festive period, with sales in value terms holding up. The month on month dive in volume growth may look alarming, but it’s a consequence of the shift in spending into November caused by the recent arrival of Black Friday, which the seasonal adjustment process will need a few more years to adjust to.
"However, the overall picture is of weak growth in quantities sold, which is not great for consumers and means downward pressure on GDP figures will continue. Inflation has meant household budgets simply aren’t stretching as far, particularly in the case of food shopping. Heavy discounting in non-food products in the few weeks before Christmas helped shoppers bag a bargain on last minute Christmas gifts, boosting volumes a little at the expense of retailers’ margins, but that did little to change the overall picture.
"While the inflationary impact on spending may subside a little bit this year, households may see little by way of a return to growth in their real spending power. With that in mind the Government should do all it can in the forthcoming trade talks to ensure the pain of price increases is not further added to by new tariffs on imports."