Omicron spread led shoppers to desert High Street

January 22, 2022 10:45 am

UK retail sales sank 3.7% in December from the month before as the spread of Omicron deterred shoppers from visiting the High Street.

Data from the Office for National Statistics also showed a 7.1% fall in clothing and other non-food sales.

However, last month’s figures followed a strong November amid reports there would be some shortages in the run-up to Christmas.

Article continues after advertisement

And while food sales fell by 1%, volumes were above pre-pandemic levels.

“After strong pre-Christmas trading in November, retail sales fell across the board in December, with feedback from retailers suggesting Omicron impacted on footfall,” said Office for National Statistics (ONS) deputy director for surveys and economic indicators Heather Bovill.

“As Plan B restrictions in England meant more people working from home, there was a notable fall for fuel sales.

“However, despite the fall in December, retail sales are still stronger than before the pandemic, with over a quarter of sales now made online.”

Fuel volumes fell by 4.7% in December on the previous month as more people worked from home, and were 6.6% below their pre-pandemic levels in February 2020.

Gavin Peck, chief executive of retailer The Works, told the BBC there were definite signs that consumers did their Christmas shopping earlier than usual last year.

Mr Peck, whose firm on Friday reported a strong rise in sales, said it was noticeable that some shoppers were starting festive purchases as early as September.

As the UK economy emerged from lockdown last year retail sales recovered quickly from their 2020 pandemic slump.

But analysts say that a combination of fast-rising inflation led by surging energy prices, the prospect of higher interest rates, and planned tax rises in April may dent the appetite of consumers to keep on spending in 2022.

Bethany Beckett, economist at Capital Economics, said December’s fall was much bigger than expected and could drag UK growth figures lower.

However, she said: “With encouraging signs that the Omicron outbreak may have turned a corner and the government’s Plan B restrictions due to be lifted next week, retail sales may recoup a bit of this fall in January and probably all of it in February and March.

“That said, with the UK’s cost of living crisis looming, we expect a weakening in the consumer recovery to dampen retail sales further ahead.”

Ms Beckett said that, despite weaker economic data, the Bank of England will remain focused on accelerating inflation, and she still expects interest rates to be raised to 0.50% in early February.

On Friday, The Restaurant Group, whose operations include Wagamama, Frankie & Benny’s, and food kiosks, said that despite the lifting of Plan B restrictions “consumer confidence may take longer to recover”.

The company’s sales figures underlined the impact of December’s Covid restrictions on trading.

At Wagamama, sales in October and November were up 11% and 8% respectively on the same months in 2019, before the pandemic hit, as people returned to eating out in larger numbers.

But in December, Wagamama sales were just 1% up on 2019, and there were even sharper falls at Restaurant Group’s other divisions.