about 1 year ago • 2 mins
Data out on Tuesday showed that UK retail sales jumped in November – but that’s got more to do with inflation than seasonal shopping.
What does this mean?
October’s paltry 1.2% annual rise in the value of retail spending had economists hoping the month was the calm before the winter spending storm. But now that November’s figures are in, it seems like this might be a “be-careful-what-you-wish-for” moment. See, the value of retail sales did climb 4.1% last month versus the year before – but for all the wrong reasons. Non-food retail sales didn't grow at all, suggesting consumers aren’t splurging on gifts and festive finery: they’ve just had to spend more to afford the bare necessities. And that 4.1% increase in the value of retail sales wasn’t adjusted for inflation – which was running at a 41-year high of 11.1% in October – meaning that the figure probably conceals a big drop in the actual volume of sales.
Why should I care?
Zooming in: If I had a little money.
That grim, expensive reality was confirmed on Tuesday by separate data from Barclaycard, which monitors almost half of the UK’s card transactions. The report showed that spending on necessities like groceries, fuel, and healthcare ticked up by 7.1% in November, while spending on utilities headed skyward and grew by over 40%. No wonder a survey found that half of all Brits are planning to cut spending this Christmas – not merry news for struggling retailers.
The bigger picture: Don’t count on growth.
Consumer spending accounts for about half of the British economy, so it’s no surprise the country’s growth outlook is currently about as strong as Australia’s white Christmas prospects. In fact, a business industry organization said this week that Britain’s economy is on track to shrink 0.4% next year – in line with the OECD's thinking, which only expects one economy in Europe to perform worse in 2023: Russia.
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