British retail sales grew at their fastest rate in more than a year during the last week of November and the first two weeks of December, a survey by the Confederation of British Industry showed on Tuesday. However, the trade body said it expected sales to slow in 2017, as the effect of a weaker currency since Britain voted to leave the European Union in June pushes up prices and squeezes household disposable income.
The CBI distributive trades survey's retail sales balance jumped to +35 for December from an already-robust +26 for the first half of November, beating industry forecasts. The CBI's December period runs from November 24 to December 13, so includes the surge in sales reported in other data created by heavy discounting following 'Black Friday' on November 25, when many British retailers copy US stores' post-Thanksgiving discounts.
"It's encouraging to see retailers reporting another month of healthy sales growth leading up to the festive season, which rounds off a fairly solid quarter," CBI economist Ben Jones said. "Pressures on retail activity are likely to increase during 2017. With higher inflation beginning to weigh on households' purchasing power, consumption patterns are likely to shift, creating winners and losers across the retail landscape."
The CBI's index for expected sales growth in January dropped to a three-month low of +18, and retailers expect orders with suppliers to slow sharply after growing at their fastest in more than a year in December. Official retail data last week showed a slowdown in sales growth in November, though this mostly reflected a fall in fuel purchases which are not included in the CBI data. Electronics sales surged off the back of Black Friday discounts.