Surprise UK retail rebound in December to be followed by bleak January - CBI

By

Sandra Halliday

Published
Dec 22, 2022

UK retail saw an “unexpected” rise in sales this month, but the festive boost is “expected to be temporary”, the CBI said on Thursday in its regular monthly UK retail sales report.

It said retailers reported a surprise rebound in sales volume growth in the year to December, but firms “anticipate little New Year cheer, with sales set to decline again in the year to January”.

The key survey findings included retail sales growing at a moderate pace in the year to December (+11% from -19% in November), against expectations of a decline. As mentioned, retailers do not expect the recovery to continue into early 2023, with many more of them feeling pessimistic about January figures (-17%). 

The long-running Distributive Trades Survey (DTS) was conducted between 24 November and 12 December with 50 retailers responding. The figures represent the weighted difference between the percentage of retailers reporting an increase and those reporting a decrease.  

Other findings included online retail sales falling at a firm pace in the year to December (-22% from -5% in November), with an even steeper decline expected next month (-34%).

Orders placed with suppliers declined, but at a slower pace than last month (-21% from -32% in November). Retailers expect orders to fall at a broadly similar rate next month (-23%). 

Overall, retailers considered stocks in December to be “too high” relative to expected sales, but to a lesser extent than last month (+16% from +22%). Stock positions are expected to ease again next month (+8%). 

Martin Sartorius, Principal Economist at the CBI, said:  “It’s encouraging to see retail sales surprise by growing this month, but any festive cheer is expected to be short-lived. Retailers are bracing themselves for the chill winds that will blow through the sector this winter, with consumer spending set to be hit hard by high inflation in 2023.”