UK: Dip in retail sales aided by growing consumer caution – ING

James Smith, developed markets economist at ING, points out that the UK retail sales (excluding fuel) fell by 1.3% in December, while constantly evolving nature of Black Friday means getting a clear picture is difficult.

Key Quotes

“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. We suspect the first few months of 2019 could be equally bumpy.”

“While consumer fundamentals have improved over recent months – real wage growth is gradually rising, while the jobs market has stayed resilient – individuals are becoming increasingly nervous about the outlook for their finances and the overall economic situation.”

“Until something shifts, we’re likely to see increasing signs of businesses performing contingency actions, and there’s a possibility this gradually slips into the consumer mindset.”