British retail sales fell by more than forecast in November, reversing some of the previous months' surprisingly hefty gains, as consumers cut back spending on computers, telecommunication products, watches and jewellery, Office for National Statistics said on Thursday.


Strongest 3-months on previous 3-months increase in retail sales volumes since August 2010



To be honest, it was in line with expectations. My reading of the survey evidence prior to the release was it could have even worse. It's all of a piece which suggests that consumers are obviously cutting back to some extent, but I do wonder whether, one month ahead of Christmas, with household finances under pressure, they're maybe holding back before a splurge in December. You're not going to get two strong months ahead of Christmas, you might get one and November wasn't it.

The simple fact is, we're seeing an increasing amount of discounting on the high street, sales seem to have become a permanent feature of the landscape. That will contribute to holding down the price of some goods, which may well boost the volume figures. As we head into next year that may well become more evident in the price numbers itself.

For the moment at least, the BoE is well aware of the pressures under which consumers are operating. This is part of the rebalancing that policymakers have been calling for some time. The BoE will probably react to economic weakness with a new round of QE.


Retail sales have posted a fairly firm run over the prior months, so it's not at all to surprising to see a retracement of volumes in November. Perhaps the rise in textile store sales was a little bit of an anomaly, given relatively warm weather, but in terms of the broad trend in sales volumes, it still looks a little bit firmer than had been the case earlier in the year.

But the outlook for the economy and consumer spending specifically remains uncertain. There are no big policy implications from this release and we still expect the MPC to sanction more QE next year.