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UK retail sales up for December as shoppers shrug off economic fears

Economists say heavy pre-Christmas discounting will have hit profit margins despite figures showing higher retail sales volumes

Britain’s indefatigable shoppers shrugged off fears of an economic downturn to take advantage of widespread discounting in the run-up to Christmas.

Retail sales volumes increased by 0.6% between November and December, according to official figures, and were 2.6% higher than a year earlier, when heavy snow kept consumers at home.

The Office for National Statistics, which publishes the figures, said sales of petrol, clothing and footwear had driven the increase.

There was also evidence that prices on the high street are rising less rapidly than earlier this year, following news that inflation has slipped to 4.2%. The “implied retail deflator,” which measures how fast prices are rising, plunged to 2.4%, from 5.2% in August, according to the ONS.

In the food sector, where Tesco’s Big Price Drop sparked a price war, inflation still came in at 4.2%, but that was the slowest growth rate for more than a year.

Chris Williamson, chief economist at information provider Markit, said heavy discounting was likely to have boosted sales.

“The indications are that high street and internet retail sales rose in December only because retailers lured hard-pressed consumers with discounts at the expense of profit margins. This was particularly noticeable for clothing and footwear.

“The big question therefore is how big the new year hangover will be, as households retrench from the Christmas mini-spending spree.”

Jane Bevis, public affairs director at the British Retail Consortium, said the Christmas splurge was likely to be short-lived.

“After a difficult year some shoppers relaxed their tight hold on their finances and allowed themselves to splash out on gifts and festive food and drink, aided by deep discounting.

“However these figures are being compared with a poor, snow-hit December the previous year and the fundamental conditions which are making business difficult for retailers haven’t changed.” © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds