Key Takeaways:
UK retail sales fell unexpectedly in December
Retail sales adjusted for Black Friday fell by 0.3% month-on-month
Sterling dipped below $1.22 against the U.S. dollar- Economists had forecasted a monthly increase in sales volumes
Figures raise expectations for a Bank of England interest rate cut- Retail sales drop by 0.8% for the fourth quarter as a whole
- Retail sales excluding motor fuel dropped by 0.6% on the month
Food sales were very poor, sinking to their lowest level since 2013
Total retail sales were 3.6% higher than a year ago
UK Retail Sales Unexpectedly Drop in December
The UK retail sector experienced an unexpected decline in December, with retail sales falling by 0.3% when adjusted for Black Friday. This drop was contrary to economists’ forecasts, who had expected to see an increase in sales volumes for the month. The surprise decline in retail sales has also contributed to a dip in the value of the British pound, with sterling falling below $1.22 against the U.S. dollar.
Potential Bank of England Interest Rate Cut
The disappointing retail sales figures have raised expectations for a potential interest rate cut by the Bank of England. With retail sales dropping by 0.8% for the fourth quarter as a whole, and a 0.6% decrease in sales excluding motor fuel on the month, there are concerns about the overall health of the UK economy. Food sales, in particular, were noted to be very poor, hitting their lowest level since 2013. Despite this, total retail sales were still 3.6% higher than the previous year, suggesting a mixed performance in the retail sector.