Retail sales fell at a sharper rate than expected in December, highlighting slowing growth that is affecting spending.
The Office for National Statistics (ONS) said UK retail sales fell in December by 1.5 percent, compared to November.
The decline in sales is partly due to inflation, which is outpacing wages and affecting spending power.
“The data add to signs that rising prices and stubbornly weak pay growth continue to erode consumer spending power and will act as a drag on the economy in 2018,” said Chris Williamson, the chief business economist at IHS Markit.
2017 saw the slowing of the British economy following higher inflation – caused by the post-referendum fall in the pound.
The ONS also stated that Black Friday sales played a big part in the fall in December spending.
Black Friday promotions have only become a bigger deal in the UK over the past few years. The increase in November sales means it is difficult for the ONS to adjust its data so figures for November and December can be compared easily from year to year.
Richard Lim, chief executive of consultancy Retail Economics, said: “All of this discounting is likely to have decimated profit margins and retailers will be counting the cost,”
The fall in retail sales was highlighted by the “sharp deterioration” in UK trade for Carpetright (LON: CPR).
“We have seen a significant deterioration in UK trading during the important post-Christmas trading period,” said Carpetright chief executive Wilf Walsh.
“While average transaction values were up year-on-year, the number of customer transactions since Christmas were sharply down.”
Predicted profits for Carpetright are now between £2 million and £6 million. This is compared with analysts’ previous estimations of £14 million.
“Carpetright’s profit warning is the latest indication that big-ticket retailers had a tough end to 2017, after Multiyork and Feather & Black fell into administration,” said Matt Walton, a senior retail analyst at GlobalData.
Following the sharp decline in sales, shares in the group plunged 45 percent.