A Christmas boost to the UK economy didn’t materialise raising fears that the UK economy is struggling worse than expected.
Sells fell by a seasonally adjusted 0.1% from the previous month and fell 0.6% for the fourth quarter of 2012, marking the slowest level of growth for a December since 2010 when sales suffered from the impacts of heavy snowfall.
The Office for National Statistics said that while sales continued to be higher than the previous year- a trend that began in August- this growth has lost its momentum. The value of goods sold in December was 0.1% higher than November, and 0.7% higher than a year ago, indicating that the gradual price rises faced by shoppers came to a halt at the end of the year.
“The high street seems to have stalled again over the past few months,” said Investec economist Philip Shaw.
“Recovery prospects will depend strongly on a pick-up in consumer activity over the first few months of 2013.”
Economists had been expecting a 1.1% monthly increase. As a result of the disappointing data the Pound fell to its weakest level in eight weeks against the US Dollar and continued to weaken against the Euro.
The worst performing retail sectors were clothing and food but online retailers did well with 10.6% of all sales being carried out via the internet, up from the previous year’s level of 9.4%. The weakness over the Christmas period was the death knell for a number of British retailers with Christmas 2012 proving to be their last.
Three major companies and household names have gone under in the space of a few weeks with Jessops, HMV and Blockbuster all entering administration, joining the likes of JJB and Comet. The decrease in consumer spending is being blamed on below-inflation wage growth and concerns over austerity measures and the economy as a whole.
The Pound to Euro exchange rate is currently trading at 1.1927
The Pound to US Dollar exchange rate is currently trading at 1.5943
The Pound to Australian Dollar exchange rate is currently trading at 1.5175
The Euro to US Dollar exchange rate is currently trading at 1.3365
The Euro to Pound exchange rate is currently trading at 0.8383
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