UK shoppers slash December spending after earlier Xmas spree, Omicron

UK shoppers slash December spending after earlier Xmas spree, Omicron

”British retail sales slumped in December after consumers did much of their Christmas shopping earlier than usual in November and many people stayed at home due to the spread of the Omicron coronavirus variant.

Economists said the scale of the hit bolstered their expectations that the world’s fifth-biggest economy shrank last month under the strain of Omicron and new government restrictions to slow its spread.

Sales volumes fell by 3.7% from November, a far bigger hit than the 0.6% decline forecast in a Reuters poll of economists and the biggest fall since January of last year when the country was under a coronavirus lockdown.

Compared with December 2020, sales volumes were down by 0.9%, the Office for National Statistics (ONS) said on Friday.

The Reuters poll had pointed to a 3.4% rise in sales in annual terms.

“After strong pre-Christmas trading in November, retail sales fell across the board in December, with feedback from retailers suggesting Omicron impacted on footfall,” ONS Deputy Director for Surveys Heather Bovill said.

“As Plan B restrictions in England meant more people working from home, there was a notable fall for fuel sales,” she added, referring to government measures to tackle the pandemic.

But retail sales remained stronger than before the pandemic, with over a quarter of sales now made online, she said.

Bethany Beckett, an economist at Capital Economics, said the data backed her view that the surge in Omicron cases in the run-up to Christmas may have caused the economy to shrink by 0.5% in December or possibly more.

Retail sales would probably recoup the hit between January and March as the government lifts its COVID restrictions but “with the UK’s cost of living crisis looming, we expect a weakening in the consumer recovery to dampen retail sales further ahead,” she said.

The FTSE MIB climbed down by 1.41% to 27,182.20. In the cash markets, the DAX  Germany was trading  down by 1.50%  to 15,674.65. CAC 40  in France  fell by 1.38% to 7,092.37 while the FTSE 100  in the U.K. was  down by 1.02% to 7,503.35 ,at the time of writing.

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