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UK retail trade growth underwhelms in the lead up to the December holidays

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UK retail trade growth underwhelms in the lead up to the December holidays

U.K. retail sales and orders continued to rise in December, building further on November's solid performance, but both disappointed expectations of somewhat stronger growth, data from the monthly distributive trades survey of the Confederation of British Industry showed.

Sales for the time of year were considered to be attuned with seasonal norms, the CBI said. The survey involved 109 firms, of which 56 respondents are from the retail trade industry.

Some 37% of retailers said sales volumes were in December on a year ago, while 17% reported a fall. The 20% positive balance was lower than the expected 30% and down from November's 26% positive number. There was an 11% positive balance in the number of retailers reporting having placed higher orders, compared to expectations of 22%.

Grocers provided the biggest boost to retail sales growth in December. There were also positive contributions from non-store retailers, hardware & DIY and "other" sales. Motor traders registered a rise in sales volumes but they anticipate much slower growth in January. Food and drink and footwear and leather saw sales fall from a year ago.

Online sales growth remained reasonably firm in the 12 months to December at a pace just below the long-run average, and is expected to decelerate further next month, the CBI said. Meanwhile, growth in wholesale sales slowed in line with projections in the year to December, with a similar rate of growth expected in the year to January.

Survey respondents anticipate similar growth in both sales volumes and orders in January.

"Notwithstanding the sales growth seen in the last couple of months, underlying trading conditions are tough for retailers. We expect the squeeze on real pay for households to last a while longer, so retailers will still face challenging conditions ahead. The Government's Industrial Strategy is a good start for boosting productivity and living standards, but consistency and determination is needed to make it a long-lasting success," CBI Principal Economist Alpesh Paleja said.