Flat sales as shoppers remain reluctant to spend

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FEARS that consumers are reining in their spending ahead of Christmas were fuelled yesterday after it emerged that sales volumes failed to rebound last month.

A predicted return to growth did not materialise, with official figures from the Office for National Statistics (ONS) revealing flat sales volumes between October and November.

It comes after a much-worse-than-expected drop in October when retail sales volumes fell 0.8 per cent month on month. The CBI said on Wednesday sales for the Christmas season had been “below par” as families try to make their budgets stretch.

Excluding fuel, the ONS figures showed the total value of sales was up 2.5 per cent in November compared with a year ago, below inflation of 2.7 per cent in the same period.

The ONS said new models of tablet computers drove a 3.8 per cent boost for household goods stores, but this failed to offset a 0.1 per cent drop in food sales. Clothes and shoes sales were also down by 0.1 per cent, with department stores also seeing sales volumes fall. But the ONS estimated that the proportion of retail sales online increased by 1.4 per cent between October and November, with the average weekly spend in November at £711m.

Across all retailing an estimated £7.3bn was spent weekly in November, around the same as last year. James Knightley, analyst at ING Bank, said the headline growth figure was a disappointing outcome following a decent bounce in consumer confidence in November.

British Retail Consortium director-general Helen Dickinson, said the figures suggested that Christmas shoppers were slow out of the blocks as pressures on budgets and the outlook left people reluctant to commit to spending early.

But she said there were signs that shopper numbers had been building at a respectable pace throughout December, especially in recent weeks. She said: “With Christmas falling on a Tuesday this year, this weekend will be the critical one – I’m expecting a last-minute rush but overall in sales terms it will be neither a bumper Christmas nor a disaster.”

Nida Ali, of the Ernst & Young ITEM Club, said: “The retail sector seems to be losing momentum but, given the ongoing squeeze on household finances, the steady increase in sales from earlier in the year was unlikely to continue indefinitely. However, sales volumes are still above their level this summer and well above a year ago, so the figures are better than they first appear.”