LONDON • UK retail sales rebounded last month, fuelled by higher food spending as Black Friday sales failed to tempt enough British shoppers to open their wallets for other things.
The British Retail Consortium (BRC) said sales rose 0.6% on a like-for-like basis after slumping the most in seven months in October. They climbed 1.5% in total terms.
Yet, the numbers suggest households are still reluctant to spend on non-essentials given the squeeze on budgets. Wages are lagging behind inflation and Brexit is creating uncertainty for the economy. The BRC said that in the three months through November, nominal food sales increased 2.8% on a like-for-like basis, buoyed by inflation, while non-food sales fell 1.2%. “Black Friday, the big retail event of the month, failed to fundamentally shift underlying trends in spending,” said Helen Dickinson, CEO of the BRC. “Rather than increasing overall sales, the event has shifted spending away from other parts of the festive period, and focuses shoppers’ attentions online.”
Non-food sales — the focus of Black Friday promotions — fell as retailers reported shoppers were tempted solely by generous promotions, with gaming, wearable tech and “the Internet of things” proving the best sellers, the BRC said.
Consumer spending grew 2.8% in the year to November, maintaining the “muted levels” of expansion seen so far in the second half of 2017, a separate report by Barclaycard said yesterday. Growth in the private sector slowed in the three months to November, according to the Confederation of British Industry.
Meanwhile, UK services growth slowed in November from the fastest pace in six months as price pressures intensified.
The services Purchasing Managers Index (PMI) fell to 53.8 from 55.6 in October, IHS Markit said yesterday. Economists had forecast a reading of 55.0.
Input costs increased the most since 2011 and prices charged rose at the fastest clip since 2008.
While the UK economy is on track to expand about 0.5% in the fourth quarter, higher oil prices and the depreciation of the pound since the Brexit vote are keeping a lid on optimism, Markit said. Service providers reported that they passed on higher costs of food, fuel, imports and salaries.
“The survey data suggest that inflationary pressures have yet to peak,” said Chris Williamson, chief business economist at IHS Markit. “Uncertainty about the economic outlook, linked commonly to Brexit worries, continued to permeate the business mood in November.”
The composite PMI figure slipped to 54.7 in November from 55.4 the previous month. A gauge of manufacturing gained to the highest in more than four years as exports were bolstered by the pound’s deprecation. — Bloomberg