Retail sales boost after prices cut


Retail sales returned to growth in the run-up to Christmas but
businesses were forced to slash prices to bring in cash-strapped
consumers, official figures revealed today..

The 0.6% rise in sales volumes last month, which followed a 0.5% drop in November, was driven by clothing chains and department stores, and came as store-price inflation, the rate at which prices rise, fell to its lowest level for 16 months, from 3.6% to 2.4%.

Some economists said while December's figures suggest the wider economy may have avoided contraction in the final three months of the year, the sector is likely to face significant pressure this year and should brace itself for a "New Year hangover".

Elsewhere, the value of retail sales grew 0.8% month-on-month and 6.2% year-on-year, but the ONS warned figures for December 2010 were distorted by the harsh winter weather.

The figures, released by the Office for National Statistics (ONS), come against a mixed backdrop in the retail sector, as major players like John Lewis, House of Fraser and Superdry owner SuperGroup put in a robust performance while others such as Peacocks and Blacks Leisure fell into administration.

The broad picture of December revealed a last-minute rush in the week running up to Christmas Day, with many retailers reporting a surge in sales in the final few days.

Profit margins across the entire retail industry have been hit by price drops, heaping further pressure on those retailers struggling to stay afloat.

Supermarkets have been embroiled in an aggressive price war while many high-street firms brought forward their end-of-year sales to pull in more customers.

Chris Williamson, chief economist at financial services information company Markit, said: "The big question is how big the New Year hangover will be as households retrench from the Christmas mini-spending spree."

Consumers spent £42.1 billion in the retail sector in December, compared to £29 billion the previous month and £39 billion the previous year, the ONS said.

Some 10.9% of all retail sales were made online, totalling £837.1 million, compared to 9.1% in December 2010.

Clothing and footwear stores saw volumes grow 1.8% month-on-month and 6.3% year-on-year while department stores, such as John Lewis, recorded 1.2% monthly growth.

Elsewhere, food store sales saw weaker growth, with volumes increasing month-on-month by 0.4% and 1.2% year-on-year.

There was evidence that spending on big-ticket items was still being held back as sales at household goods stores fell by 2.4% month-on-month, the biggest drop since April 2010.

Howard Archer, chief UK and European economist at IHS Global Insight, said December's figures boosted hopes that the total economy avoided contraction in the fourth quarter of 2011. The official figures for gross domestic product (GDP) between September and December will be released on Wednesday.

But he warned: "The risk remains that pressurised and worried consumers will put away their purses and wallets, and hunker down for an extended period after a late flurry of spending in the run-up to Christmas and then taking advantage of the best of the bargains in the clearance sales."


ebooksAn unforgettable anthology of contemporary reportage
Oscar Pistorius is led out of court in Pretoria. Pistorius received a five-year prison sentence for culpable homicide by judge Thokozile Masipais for the killing of his girlfriend Reeva Steenkamp
voicesThokozile Masipa simply had no choice but to jail the athlete
Arts and Entertainment
Sister Cristina Scuccia sings 'Like a Virgin' in Venice

Like Madonna, Sister Cristina Scuccia's video is also set in Venice

Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004

Singer says the track was 'force-fed down people's throats'

Life and Style
The Tinder app has around 10 million users worldwide

techThe original free dating app will remain the same, developers say

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album