UK retail sales suffer sharpest monthly decline in over a year in December

UK retail sales suffered their biggest monthly drop in over a year in December 2015, although that did not stop sales from registering the biggest annual gain since 2004, figures released by the Office for National Statistics (ONS) on 22 January showed.

According to the ONS, annual sales rose 4.6%, the most since 2004, while in December 2015 retail sales rose 2.6% year-on-year, compared with a 3.9% rise in November and analysts' forecast for a 3.5% gain.

On a month-on-month basis, retail sales fell 1%, the largest monthly decline since September 2014, compared with analysts' expectations for a 0.3% decline and a downwardly revised 1.73% advance in the previous month.

Average store prices, including petrol stations, fell by 3.2% in December 2015 compared with December 2014, the 18th consecutive month of year-on-year price falls.

"The weaker than expected December retail sales data is the final prod that causes us to trim our estimate of GDP growth in the fourth quarter of 2015 to 0.4% quarter-on-quarter from the 0.5% that we had previously anticipated," said Howard Archer, chief European & UK economist at
IHS Global Insight.

"The disappointing December retail sales data follow on from recent news of falling industrial production and constriction output in November and an ongoing weak net trade performance.

Meanwhile, the value of online sales increased by 8.2% in December 2015 compared with December 2014 and decreased by 5.2% compared with November 2015.

Earlier in January, the ONS said Britain's consumer price index (CPI) grew by 0.1% month-on-month in December 2015, while analysts had expected growth to remain stagnant, as it had been in the previous month.

On a year-on-year basis, CPI rose by 0.2% in the last month of 2015, generally in line with analysts' expectations and up from the 0.1% recorded in November.