UK retail sales beat expectations in November

Retail sales in the UK grew at the fastest pace in over a year in the 12 months to November, according to the latest quarterly Distributive Trades Survey from the Confederation of British Industry.

The retail sales balance rose to +26%, its strongest level since September last year, as 42% of retailers said volumes were up in November compared to a year ago.

This was comfortably ahead of economists’ expectations for a slump to +12.

Meanwhile, 39% of respondents said they expect sales volumes to increase next month, with 16% expecting a decrease, giving a balance of +23%.

The CBI said the increase in retail sales volumes was driven by the clothing and non-store goods sectors, as well as hardware and DIY.

CBI chief economist Rain Newton-Smith said: “It’s great to see retailers reporting such a buoyant month for sales. With the later onset of cold weather, shoppers stocking up their winter wardrobe has helped to boost high street sales.

“While we expect to see decent growth in the near term, retailers are keeping a close eye on price rises coming down the track and the impact on consumer spending.”

Howard Archer, chief UK and European economist at IHS Markit, said: “A buoyant November CBI DistributiveTrades survey points to consumers still splashing out in the fourth quarter, thereby boosting hopes that GDP growth will hold up well.

“The decent November CBI survey follows on from hard data from the Office for National Statistics showing that retail sales volumes surged 1.9% month-on-month and 7.4% year-on-year in October.”

Pantheon Macroeconomics cautioned that the strength in retail sales might reflect consumers making big purchases before imported goods prices leap in 2017.

"Inflation expectations have picked up steadily over the last six months. If so, then the slowdown in retail sales growth early next year will be particularly acute," it said.