Investing.com – Retail sales in the U.K. declined much more than expected in December, dampening optimism on the British economy, official data showed on Friday.
In a report, U.K. Office for National Statistics (ONS) said that retail sales decreased 1.9% in December from the prior month, compared to the prior decline of 0.1% which was revised from a previous 0.2% increase.
The largest contribution to the month-on-month fall came from non-food stores, according to the ONS.
Analysts had expected December’s reading to drop by just 0.1%.
Year-on-year, retail sales increased 4.3% last month, compared to forecasts for growth of 7.2% and November’s 5.7% advance which was revised from the initial reading of a 5.9% gain.
Core retail sales, which exclude automobile sales and fuel, fell 2.0% on the month, compared to the prior 0.2% increase in November which was revised down from an initial 0.5% advance.
Analysts had expected core retail sales to decline 0.3% last month.
Year-on-year, core retail sales rose 4.9% in December, compared to the previous month’s 6.4% increase (initially 6.6%) and the consensus forecast for 7.6% advance.
"Retailers saw a strong end to 2016 with sales in the final quarter up 5.6% on the same period last year, although the amount bought fell between November and December once the effects of Christmas are removed," ONS senior statistician Kate Davies said.
"There were some notably strong figures from smaller retailers, in particular butchers, who reported a significant boost in sales in the run up to Christmas," she added.
In an immediate reaction, the pound turned lower. GBP/USD traded at 1.2296 from around 1.2331 ahead of the release of the data, EUR/GBP was at 0.8662 from 0.8645 earlier, while GBP/JPY traded at 141.34 compared to 141.73 before the report.
Meanwhile, European stock markets saw mixed trade. London’s FTSE 100 slipped 0.10%, the Euro Stoxx 50 gained 0.12%, France's CAC 40 edged forward 0.05%, while Germany's DAX inched down 0.04%.