Retail sales tumble over Christmas amid Omicron as inflation fears hit UK consumer confidence – Business Live | Business | Latest News Headlines

The huge 3.7% m/m drop in retail sales in December was much bigger than economists had expected.

This strongly suggests the UK economy contracted last month, amid soaring Omicron cases and Plan B restrictions, just after hitting pre-pandemic levels again in November.

Bethany Beckett of Capital saving says GDP could have fallen 0.5% in December, during “a very unhappy Christmas for retailers”.

With encouraging signs that the Omicron outbreak may have taken a turn and the government’s ‘plan B’ restrictions are due to be lifted next week, retail sales could recover some of that fall in January. and probably all in February and March.

That said, with the cost of living crisis looming in the UK, we expect a weakening consumer recovery to further dampen retail sales. For the Bank of England, however, this is high inflation, not low activity. We therefore still believe that interest rates will be raised to 0.50% at the beginning of February.

Suren Thiru, responsible for the economy at british chambers of commerce, acknowledges that there could have been a “modest fall” in GDP last month.

This graph shows how “non-food stores” across Britain saw a sharp drop in sales, down 7.1% on average:

They are still 2.3% below their pre-coronavirus levels, while overall retail sales are 2.6% higher than in February 2020.

Juicet in: Retail sales in Britain fell last month as the introduction of Covid-19 restrictions hit spending over the crucial Christmas period.

Retail sales volumes fell 3.7% in December 2021, reports the Office for National Statistics.

Spending fell as shoppers steered clear of high streets and malls after the discovery of the Omicron variant, and after a surge in November as some people finished their Christmas shopping early.

Sales in non-food outlets, such as department stores, clothing stores and household goods sellers have been hit hard, according to the ONS:

Clothing stores and department stores were down 8.0% and 6.3% on the month and were 7.2% and 10.6% below February 2020 levels.

Sales volume at household goods stores fell 3.2% in December and was 1.4% below its February 2020 level.

Some retailers said the Omicron variant, which rose rapidly in December, hit shoppers’ visits, the ONS reports.

Petrol and diesel sales fell 4.7% as people were told to work from home if they could.

Food store sales volumes decreased by 1.0% in December 2021; but despite this decline, volumes were 2.0% higher than February 2020 levels.

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British consumer confidence has fallen to its lowest level in nearly a year as people grow increasingly fearful of inflation, fuel bills and rising interest rates.

A closely watched indicator of consumer sentiment, from research firm GfK, fell four points to minus 19 in January, the weakest since last February during the last lockdown.

People are less optimistic about their own financial situation and the general economic climate, due to rising bills and likely interest rate hikes.

Joe Staton, Customer Strategy Director, GfK warns that the pressure will last for months.

“The financial pulse in the UK weakened further in January due to concerns about personal finances and the general economic situation.

“All five metrics are down in January and the picture for the economy is particularly bad with an eight point drop in how we view the past year and the year ahead. Despite some good news about the easing Covid restrictions, consumers are clearly bracing for soaring inflation, rising fuel bills and the prospect of rising interest rates.

“The four-point drop in the major purchases index certainly suggests that people are ready to tighten their belts. Will the mood improve when the latest wave of the pandemic subsides and Covid numbers improve? This seems unlikely as it is the cost of living pressure that worries us now and it will affect us for months.

Also coming today

Stock markets are nervous, after Netflix warned last night that its subscriber growth will slow significantly in the current quarter. This pessimistic forecast caused its share of after-hours trading to fall by 20%:

European markets would fall between 1% and 2%:

Bank of England policymaker Catherine Mann will deliver a speech on inflation, while the final day of ‘virtual Davos’ will hear from Australian Prime Minister Scott Morrison, ECB chief Christine Lagarde, IMF chief Kristalina Georgieva and US Treasury Secretary Janet Yellen.

Agenda

• World Economic Forum Davos Program
• 7am GMT: UK retail sales for December
• 13:00 GMT: Bank of England policymaker Catherine L Mann delivers speech ‘On returning inflation to target’
• 3 p.m. GMT: Eurozone consumer confidence