UK retail sales rise in December but conditions are still tough for retailers

By

Barbara Santamaria

Published
Dec 21, 2017

Retail sales continued to rise in the year to December, but growth wasn’t as strong as expected, according to the latest monthly CBI Distributive Trades Survey.

The survey of 109 companies revealed that the retail sales balance fell from +26 in November to +20 in December, and failed to reach the +30 balance predicted by experts, but it is still considered to be in line with seasonal norms.

Grocers were the main driver of retail sales growth in December, followed by non-store retailers, hardware & DIY, and ‘other’ sales such as flowers and jewellery. Specialist food & drink, and footwear & leather sales saw sales fall on last year.

Online sales volumes were also robust at +41, albeit lower than in the year to November when they were +46. Growth in online sales is expected to slow further in January, according to CBI.

“Retailers have seen decent growth heading into the vital Christmas trading period, although it was weaker than expected. It’s clear that people are stocking up on food for their Christmas lunch, with grocers’ sales driving most of the sales growth seen in December,” said Alpesh Paleja, CBI Principal Economist.

“Notwithstanding the sales growth seen in the last couple of months, underlying trading conditions are tough for retailers. We expect the squeeze on real pay for households to last a while longer, so retailers will still face challenging conditions ahead. The Government’s Industrial Strategy is a good start for boosting productivity and living standards, but consistency and determination is needed to make it a long-lasting success.”

Looking ahead to January, retailers expect similar growth in sales volumes.