LONDON: A spending spree by British shoppers in the week before Christmas failed to prevent sales in December from falling short of the previous year’s level, while shop prices are expected to surge in 2017, surveys showed on Friday.
Robust growth in consumer spending has been one of the main factors sustaining Britain’s economy since last June’s vote to leave the EU. But many retailers fear a squeeze on spending as inflation begins to erode real earnings growth in 2017.
Monthly surveys from accountancy firm BDO and the European Commission (EC) showed retail sales slowed in December, with the latter showing a record jump in retailers’ price expectations.
Like-for-like retail sales in December fell 0.1 percent year-on-year, according to BDO. However, online sales in the month rose 19 percent year on year, further evidence of a shift in shopping habits.
“With such a weak base for December 2015 (when sales fell 5.3 percent) any further decline can only be seen as a poor result for retailers,” said Sophie Michael, head of retail and wholesale at BDO.
“Coming at a critical juncture, this fourth negative December in succession highlights the magnitude of the challenge that lies ahead for 2017, when consumers will more keenly feel the bite of inflation and the weaker pound,” she added.
The pound is still down around 12 percent on a trade-weighted basis since the vote for Brexit on June 23. Bank of England chief economist Andy Haldane said on Thursday the effect of sterling’s slump was starting to trickle into higher shop prices.
The EC’s gauge of UK retailers’ price expectations for the coming months more than doubled between November and December, a record increase to levels nearing the all-time highs reached in 2011, the last time consumer price inflation topped 5 percent. The mixture of burgeoning inflation pressure and strong consumer spending leaves the Bank of England with a balancing act between trying to keep prices under control while supporting the economy.
BDO said that in the week leading up to Christmas Day sales increased 11.7 percent year on year — the largest weekly growth figure for the whole of 2016. However, the outcome partly reflected Christmas Day falling on a Sunday.
On Wednesday clothing retailer Next, the first major British retailer to give an update on Christmas trading, cut its profit forecast for the current financial year and warned of a further decline in 2017-18.
The British Retail Consortium is scheduled to publish December sales data on Jan. 10. Official data for the month is published on Jan. 20.
Next week will also see a raft of Christmas trading updates, including from supermarkets Morrisons, Sainsbury’s and Tesco and from Marks & Spencer, Debenhams and ASOS.
UK retail sales edge lower in December, price pressures spiral
UK retail sales edge lower in December, price pressures spiral
Free trade negotiations between GCC, India mark new phase of partnership, says sec-gen
RIYADH: The Gulf Cooperation Council’s secretary-general affirmed that the negotiations for a free trade agreement between the GCC and India, and the signing of the joint statement, represents a new phase of strategic partnership.
Jasem Mohamed Al-Budaiwi said that this contributes to enhancing close cooperation and strengthening economic and trade ties, according to the Saudi Press Agency.
This came during the signing ceremony of the joint statement on launching the free trade agreement negotiations between the Al-Budaiwi and India’s Minister of Commerce and Industry, Piyush Goyal, which took place in New Delhi, on Tuesday.
During the signing ceremony, Al-Budaiwi said that the Terms of Reference, signed on Feb. 5, provide a comprehensive and clear framework for these negotiations. The two nations agreed to discuss enhancing cooperation in vital strategic areas, including trade in goods, customs procedures, and services.
Additionally, the framework covers Sanitary and Phytosanitary measures, intellectual property rights, cooperation on Micro, Small, and Medium Enterprises, along with other topics of mutual interest. This reflects the comprehensive nature of the agreement and its ability to keep pace with the future economy.
Al-Budaiwi expressed hope that these negotiations would lead to a comprehensive and ambitious free trade agreement that works to remove customs and non-customs barriers, enhance the flow of quality investments in both directions, and achieve further liberalization in trade and investment cooperation between the GCC and India for mutual benefit.
This would provide a stimulating economic environment and an investment climate that opens broad horizons for the business sector, supports supply chains, and accelerates the pace of economic growth in line with the ambitious developmental visions of the GCC states.
The top official affirmed the full readiness of the General Secretariat to host the first round of negotiations at its headquarters in Riyadh during the second half of this year.
The two sides held a meeting during which they reviewed the existing cooperation relations between the GCC and India and discussed ways to develop and elevate them to broader horizons, serving mutual interests and enhancing opportunities for strategic partnership between the two sides, particularly in the economic, investment, and trade fields.
They praised the role undertaken by the negotiating teams from both sides, appreciating the efforts contributing to reaching a comprehensive agreement that enhances economic integration and supports the smooth flow of trade between the two nations.
