British retail sales slid unexpectedly in November, despite the men’s soccer World Cup and the Black Friday sales promotions, showing the stress felt by many households as the cost-of-living crisis eats into their finances.
In the latest warning sign that Britain’s economy might have entered a recession, retail sales volumes dropped by a month-on-month 0.4% from October. A Reuters poll of economists had pointed to a 0.3% rise.
Sales had risen by 0.9% in October, a bounce from September when sales were hit by a one-off public holiday to mark the funeral of Queen Elizabeth.
“The fact that not even the World Cup and Black Friday Christmas shopping could produce an increase in sales will come as a major disappointment to retailers, especially considering the increase last month,” said Lynda Petherick, retail lead at consultancy group Accenture in the UK and Ireland.
The Office for National Statistics (ONS) said some of the drop could reflect how the data did not include “Cyber Monday” online sales which fell on Nov. 28, which will be included in December’s figures.
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Still, Friday’s figures were consistent with other signs that consumers are struggling. Retail sales volumes fell to 1.5% below their pre-pandemic 2019 level.
Earlier, market research firm GfK said British consumer confidence crept up this month but was still close to all-time low levels.
“The EY ITEM Club expects the pressure on household budgets will remain severe in the near-term, with wage growth continuing to run well below inflation,” the consultancy’s economist Martin Beck said.
The latest readings of Britain’s economy came a day after the Bank of England raised interest rates for the ninth meeting in a row and indicated more hikes were likely.
But investors said the central bank might be getting close to the end of its increases in borrowing costs as inflation shows signs of having peaked and the economy appears to have entered a recession.
Olivia Cross, an economist with Capital Economics, said the dip in inflation from 11.1% in October to 10.7% in November was unlikely to provide much relief to consumers.
“We doubt there is a sustained recovery in retail sales volumes in the pipeline,” Cross said. “We expect that high inflation will drive further falls in real household disposable income of 1.1% in Q4 2022, which will keep sales volumes subdued in December.”
Samuel Tombs, an economist with consultancy Pantheon Macroeconomics, said retailers would also probably face a further drop in demand in December due to heavy snowfall this month.
Compared with a year earlier, retail sales in November were 5.9% lower, the ONS said, a slightly steeper fall than forecast in the Reuters poll.
An ONS survey published on Thursday showed one in six people in Britain were worried about running out of food and more cannot keep warm enough in their own homes.