It was a bad, bad month for retail land in December.

Sales at all retailers fell 0.8 per cent in December on the month before, and annual growth was a big fat nothing – or zero.

Poor sales of fuel helped to distort the picture. It is not hard to see why. After all, when the snow came down, people drove less. But even if you stripped put the effect of auto sales including fuel, sales were still down 0.3 per cent on the month before.

Clothing was another big casualty, with sales down 2 per cent.

Chris Williamson, Director and Chief Economist at Markit said: “December proved to be a disastrous trading month for retailers, as many had anticipated, with a record drop in sales for the crucial Christmas shopping period.” He added: “While snow undoubtedly contributed to the disappointing performance in December, we believe that demand is weakening and therefore expect consumer spending to remain under pressure in coming months due to the combination of this month’s VAT rise, falling real incomes, high unemployment and widespread job insecurity. This adds to the risk that economic growth will slow further in the first quarter of 2011 from the already modest 0.4% quarterly rate of increase we have pencilled in for the final quarter of last year.”

Vicky Redwood, Senior UK Economist at Capital Economics said: “The outlook for spending this year remains pretty bleak. Note that the Bank of England’s latest Trends in Lending Report revealed a fall in mortgage approvals from 45,000 to 40,000 in December. Although the snow may again have been partly to blame, the housing market is clearly weakening – adding to the numerous other pressures building on consumers.”

A spokesmen at Investment and Business News said: “Oh dear.”


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