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December a drag for UK retail sales

Friday, January 20, 2017 - 01:37

An unexpectedly weak December dragged on British retail sales growth in the fourth quarter of last year. David Pollard reports.

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The shops are full. And with low interest rates and plentiful cheap money, so are their wallets. British consumers have largely laughed off Brexit. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "The UK consumer never ceases to amaze, quite how much money they are able to spend. Particularly when it's not their money, because what we're seeing is the level of borrowing going up very considerably, particularly short-term borrowing." Could the smile be slipping? Sales overall in Q4 grew by 1.2 per cent - enough to add a tenth of a percent to GDP. Sales in the vital Christmas period: not so festive. Dropping 1.9 percent month-on-month in December. Far below forecasts - and their worst fall in over four years. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "This probably can't be sustained, and the management of their personal debt is going to be an increasing burden. So I suspect this may be as good as it's going to get for the time being. From here on, life gets tougher." The figures are at odds with strong Christmas reports from some high-street retailers. And wage growth is at its strongest in two years. But inflation too is gathering strength. Now at 1.6 per cent, many economists tip a spike to three per cent by year end. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "In 2014-15 ... people in real terms saw wage rises ahead of inflation. Now, we're going to see that line cross again and go through a period of higher inflation and wage rises at a lower level and probably looking pretty static." Raising the risk of a UK retail limbo. Debt and inflation up ... Sentiment and - who knows - growth down for 2017.

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December a drag for UK retail sales

Friday, January 20, 2017 - 01:37