Retail sales figures published yesterday by the Office for National Statistics (ONS) have retail experts concerned over the fragile nature of the sector.
According to the ONS, sales values rose by 3.4 per cent year-on-year in November and sales volumes increased 0.3 per cent month-on-month.
Trading has seen a significant boost over the winter months but research consultancy Capital Economics has warned the UK to “expect the spending recovery to fade pretty quickly at the start of next year”.
Responding to the ONS figures, BRC Director General, Stephen Robertson, said: “These official figures confirm how delicately balanced the retail sector is ahead of Christmas.
“Total sales growth has been weak for eight months now and a third of retailers have told us they’re expecting a worse Christmas than last year. What growth there is, is largely coming from food sales.”
Sales of household goods dropped 1.1 per cent in November and with the VAT rise in January, sales volumes of big ticket items are expected to decline.
Yearly growth in sales volumes has only crept up 1.1 per cent but sales values have risen by 3.5 per cent during 2010.
Economists Vicky Redwood and Samuel Tombs of Capital Economics commented: “Consumer spending could end the year on a relatively strong note. Spending in November and at the start of December was reasonably solid.
“And sales could yet receive a boost from consumers bringing forward spending on big-ticket items ahead of the VAT rise. That said, the outlook for spending at the start of next year is getting worse.”
Consumer confidence has remained consistently low this year and with more heavy snow expected over Christmas footfall, deliveries and distribution could again be affected before New Year’s Eve.
Robertson added: “Our figures show one in four households have no disposable income left at the end of the month, and that’s likely to get worse.
“Add in the disruption caused to our high streets by the severe winter weather and it all makes for a nail-biting end to the year for retailers.”