In December, retail sales in the UK witnessed a notable decline of 3.2%, marking the most significant drop since the onset of the Covid pandemic.

Official data revealed a substantial decrease in the demand for goods, including a decline in food sales leading up to the Christmas period.

The Office for National Statistics (ONS) suggested that people opted to do their shopping earlier in November, taking advantage of Black Friday sales, contributing to the steepest fall in retail sales since January 2021.

According to the ONS, the purchase of non-food products decreased by 3.9% in December, compared to a 2.7% increase in November. Food demand also saw a decline of 3.1% at the end of the year, following a 1.1% rise in November.

Heather Bovill, Deputy Director for Surveys and Economic Indicators at the ONS, noted that December's retail sales decline "was the largest overall monthly fall since January 2021, when the reintroduction of pandemic restrictions knocked sales heavily."

The disappointing retail sales figures, worse than expected, raise concerns that the UK may have entered "the mildest of mild recessions" at the close of 2023, according to Alex Kerr, Assistant Economist at Capital Economics.

A recession is typically defined by two consecutive quarters of economic output contraction. The UK economy shrank by 0.1% between July and September, contracted again in October, but rebounded in November.

Kerr suggested that, even considering the impact of Black Friday sales on shopping, December's decline was "far bigger" than anticipated. Factors contributing to this decline include consumers advancing their Christmas purchases to November and ongoing challenges from the cost-of-living crisis and a significant increase in interest rates, impacting real incomes and consumer spending.

While inflation rates have decreased from the peak in October 2022, recent figures indicate a rise to 4% in December, contrary to widespread expectations of a continued decline. This has implications for the Bank of England's anticipated interest rate cut, with the possibility of a delay until June, as rates currently stand at 5.25%. Photo by James Petts from London, England, Wikimedia commons.