2019.01.1808:51:00UTC+00UK Retail Sales Fall Worst Since May 2017

UK retail sales decreased in December at the fastest pace in over one-and-a-half years, suggesting that households have started to rein in their spending ahead of Brexit.

The seasonally adjusted retail sales including auto fuel decreased 0.9 percent from November, when they grew 1.3 percent driven by Black Friday sales, figures from the Office for National Statistics showed on Friday. Economists had expected a 0.8 percent decline.

On a year-on-year basis, retail sales rose 3 percent in December following a 3.4 percent increase in the previous month. Economists had expected a 3.8 percent growth.

Excluding auto fuel, the retail sales volume fell 1.3 percent monthly in December, which was the biggest drop since May 2017, when sales deceased 1.6 percent. In November, sales grew 1 percent. Economists were looking for a 0.8 percent decline.

Compared to the same month a year ago, retail sales rose 2.6 percent in December following a 3.5 percent increase in November. Economists had expected a 3.6 percent increase.

In the three months to December, total retail sales fell 0.2 percent from the three months to November, when they rose 0.2 percent. The latest decline was the first since the three months to March. Sales in all main sectors decreased except fuel.

Excluding auto fuel, sales decreased 0.4 percent after a 0.3 percent gain in the quarter to November.

Retail sales rose 2.7 percent in the year 2018, after 2 percent gain in 2017 and a peak growth of 4.7 percent in 2016, the ONS said.

"The constantly evolving nature of Black Friday means getting a clear picture is difficult," ING economist James Smith said.

"Having said that, this latest decline echoes the British Retail Consortium and the Visa Spending Index, both of which pointed towards a fairly torrid time for UK high streets over Christmas."

Smith suspects the first few months of 2019 could be equally bumpy for UK retail sales.