UK retail sales stabilise in December

After two months of sharp declines, UK retail sales volumes stabilised for the year to December, with retailers viewing sales as good for the time of year to the greatest extent since March 2019. According to the CBI’s The CBI’s latest monthly Distributive Trades Survey, orders placed also broadly stabilised after 13 consecutive months of decline.

The report, featuring the views of 143 businesses, including 81 retailers, also found that internet sales grew at an above average pace for the third consecutive month.

Conducted between 23rd November and 14th December (and therefore covering the latter part of the second English lockdown and the return to tiered restrictions) the CBI’s survey revealed significant divergence across sub-sectors. While grocers, furniture vendors and retailers of ‘other normal goods’ (cards, flowers and jewellery) saw strong growth; clothing, footwear and department stores continued to report that volumes were lower than a year earlier.

Looking ahead, overall retail sales volumes and orders placed with suppliers are expected to fall sharply in the year to January, with sales expected to be below seasonal norms.

Stock levels were viewed as broadly adequate for expected sales, but the balance of responses was the lowest in more than a decade.

Ben Jones, principal economist at the CBI, said: “It says something about the challenges the retail sector has faced during 2020 that stable sales volumes in the run-up to Christmas were seen as a good result for the time of year.

“The new year looks set for an unpromising start, with retailers anticipating a sharp fall in sales in January. An expected deterioration in the labour market will likely weigh on household spending, even assuming the roll-out of Covid-19 vaccines paves the way for a gradual lifting of restrictions as the year progresses.

“Government support measures, such as business rates relief and the extended furlough scheme, have been immensely helpful for retailers. To assist with planning, a priority now should be to avoid any sudden cliff-edges as schemes are wound down.”

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