(qlmbusinessnews.com via uk.reuters.com — Thur, 14 Dec 2017) London, UK —
LONDON (Reuters) – British shoppers pounced on electrical goods and other Black Friday bargains last month, giving an unexpectedly big boost to retail sales, which contrasted with earlier signs of a subdued start to Christmas spending.
Consumers have been squeezed through most of this year by rising inflation which hit its highest in nearly six years last month, at a time when wages are failing to keep up.
But there was some unexpected cheer for retailers in November data from the Office for National Statistics, which showed sales volumes were 1.6 percent higher than a year ago, beating all forecasts in a Reuters poll of economists.
Spending in cash terms was 4.7 percent higher.
The market reaction was muted and some economists said the surge in retail sales might reflect Christmas spending being brought forward to take advantage of Black Friday discounts.
“The boost from Black Friday will be fleeting,” Samuel Tombs of Pantheon Macroeconomics said.
The figures may provide some reassurance to the Bank of England, which raised interest rates for the first time in over a decade last month and will publish its latest rate decision at 1200 GMT.
Kallum Pickering, an economist with Berenberg Bank, said the figures added to signs from factories that Britain’s economy was picking up a bit of speed in late 2017 and he expected that momentum to continue into 2018.
“The risk from inflation to real spending growth has been exaggerated. Households will simply borrow a little more and save a little less to smooth out their consumption,” he said.
On the month, overall retail sales were 1.1 percent higher, up from growth of 0.5 percent in October and much stronger than economists’ forecasts of a 0.4 percent rise.
Household goods stores specifically reported that Black Friday promotions had boosted sales, the ONS said, with the amount of electrical household appliances sold jumping by nearly 9 percent compared with October.
The data are seasonally adjusted, but the agency said this may not fully strip out the effect of Black Friday, as the promotion period – a relatively recent phenomenon borrowed from the United States – has increased in Britain in recent years.
Looking at the past three months as a whole, which smoothes out monthly volatility, the picture is gloomier. Sales in the three months to November grew by just 1.0 percent compared with a year earlier, the weakest since May 2013.
When the BoE raised interest rates on Nov. 2, it forecast real-terms household consumption growth would slow to 1 percent next year from 1.5 percent predicted for this year as demand shifted towards business investment and exports.
Official data earlier this week showed that consumer price inflation rose to its highest in nearly six years at 3.1 percent in November, while the number of people in work fell for a second consecutive month.
Food prices are rising at their fastest rate in four years, adding to the squeeze on household budgets. The ONS data showed the volume of food purchased was 0.1 percent lower than a year before, while spending on food was up by 3.5 percent.
This week British electronics retailer Dixons Carphone said it had enjoyed record sales during November’s Black Friday promotion, despite weak demand for mobile phones that hit profits.
But home furnishings company Carpetright (CPRC.L) cut forecasts after warning of fragile consumer confidence.
The British Retail Consortium said last week its members had seen subdued sales last month and credit card company Visa reported the first year-on-year fall in inflation-adjusted spending in five years as Britons cut back on big purchases.