UK retail sales rebound in the run-up to Christmas

Retail sales  bounced back in November after falling at their steepest rate since the recession in the previous month

Rising inflation means consumers are beginning to feel the pinch
Rising inflation means consumers are beginning to feel the pinch

Retail sales bounced back in November after falling sharply the previous month, according to the latest CBI survey, lifting the gloom that has been hanging over the sector.

The CBI’s Distributive Trades Survey revealed that 39 per cent of respondents reported that sales volumes were up on the same time last year. This compares to 13 per cent that said they were down, giving a balance of 26 per cent.

The survey of 128 respondents found that the balance of retailers reporting a rise in average selling prices in the year to November was +75 – the strongest growth in average selling prices in over 26 years.

The news will come as welcome relief to beleaguered retailers in the run-up to Christmas.

Last month’s survey recorded the fastest rate in decline for the industry since March 2009, when the UK was in recession.

Many retailers have been hit by the slowdown in consumer spending. With inflation rising faster than wages, consumers are beginning to feel the pinch and have cut back on their household budgets.

The closing date for the survey was 14 November, well before the beginning of the crucial Black Friday week which is expected to push sales even higher.

Rain Newton-Smith, CBI chief economist, said: “It’s great to see retail sales rebound this month after a big dip, but let’s be clear: our high streets are not out of the woods. Ahead of the crucial run up to Christmas, the weaker pound has pushed up prices and retailers are nervous about business conditions and are trimming their workforces.

“The relief from the rising burden of business rates in Chancellor’s Budget will be welcome on the UK’s high streets, as will the investment in local transport connections and housing which should supporting our local communities but the job is not done, now is the time for swift delivery.”

Sales volumes are predicted to pick up again next month, with 39 per cent of retailers expecting them to rise versus 9 per cent that think they will fall.

However, more expect their overall business situation to deteriorate over the next three months than think it will improve – making it the fourth consecutive quarter of falling sentiment.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “We strongly doubt that consumers, hit by rapidly rising prices, higher interest rates and slowing employment growth, will be able to keep increasing their overall real spending.”

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