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| Black Friday lifts UK retail sales despite income squeeze | Black Friday lifts UK retail sales despite income squeeze |
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| Black Friday discounts encouraged British consumers to increase their spending on the high street and online in November, despite the most protracted squeeze on household income in memory. | Black Friday discounts encouraged British consumers to increase their spending on the high street and online in November, despite the most protracted squeeze on household income in memory. |
| Officials at the Office for National Statistics said the American-inspired promotional event had helped drive a 1.1% increase in the number of goods bought last month compared with October, with sales of electrical household appliances making the biggest contribution to growth. City economists had forecast growth of 0.4%. | Officials at the Office for National Statistics said the American-inspired promotional event had helped drive a 1.1% increase in the number of goods bought last month compared with October, with sales of electrical household appliances making the biggest contribution to growth. City economists had forecast growth of 0.4%. |
| The figures suggest consumers are willing to keep spending despite the sharpest rise in inflation for almost six years, driven by the higher cost of importing goods to the UK as a consequence of the pound’s weakness since the Brexit vote. | The figures suggest consumers are willing to keep spending despite the sharpest rise in inflation for almost six years, driven by the higher cost of importing goods to the UK as a consequence of the pound’s weakness since the Brexit vote. |
| Households are also coming under pressure from weak wage growth, despite record levels of unemployment in the UK and falling net migration, which should be acting to drive up the bargaining power of British workers to demand higher wages as firms face labour shortages. | Households are also coming under pressure from weak wage growth, despite record levels of unemployment in the UK and falling net migration, which should be acting to drive up the bargaining power of British workers to demand higher wages as firms face labour shortages. |
| According to the Resolution Foundation thinktank, average annual pay when taking account of inflation may not return to its pre-financial crisis peak until at least 2025. | According to the Resolution Foundation thinktank, average annual pay when taking account of inflation may not return to its pre-financial crisis peak until at least 2025. |
| Economists have previously that warned stronger spending growth may be coming at the expense of household savings as a result of rising prices and weaker earnings growth. Households also run the risk of borrowing more to keep up with the rise in the cost of living. | Economists have previously that warned stronger spending growth may be coming at the expense of household savings as a result of rising prices and weaker earnings growth. Households also run the risk of borrowing more to keep up with the rise in the cost of living. |
| Still, the sales figures are encouraging for the health of the economy, providing a shot in the arm for retailers hit by higher inflation driving up their costs and potentially discouraging shoppers. Economists said the sales increase would help boost GDP growth in the final three months of the year. | Still, the sales figures are encouraging for the health of the economy, providing a shot in the arm for retailers hit by higher inflation driving up their costs and potentially discouraging shoppers. Economists said the sales increase would help boost GDP growth in the final three months of the year. |
| The Bank of England is likely to take comfort from the unexpected stronger growth in consumption, after raising interest rates for the first time in a decade last month to curb rising inflation. The Bank argued the growth potential of the economy before prices began to spiral had fallen since the Brexit vote. | The Bank of England is likely to take comfort from the unexpected stronger growth in consumption, after raising interest rates for the first time in a decade last month to curb rising inflation. The Bank argued the growth potential of the economy before prices began to spiral had fallen since the Brexit vote. |
| Threadneedle Street left interest rates on hold on Thursday after the first meeting of its monetary policy committee since November’s rate hike – in line with expectations from City economists. However, the Bank said it still saw the need for “further modest increases” over the next few years to get inflation down to its target rate of 2%. | Threadneedle Street left interest rates on hold on Thursday after the first meeting of its monetary policy committee since November’s rate hike – in line with expectations from City economists. However, the Bank said it still saw the need for “further modest increases” over the next few years to get inflation down to its target rate of 2%. |
| The consumer price index (CPI) measure of inflation rose to 3.1% in November, the highest level in almost six years, forcing Mark Carney, the Bank’s governor, to write a letter to the chancellor, Philip Hammond, to explain why inflation was more than one percentage point higher than the official target. | The consumer price index (CPI) measure of inflation rose to 3.1% in November, the highest level in almost six years, forcing Mark Carney, the Bank’s governor, to write a letter to the chancellor, Philip Hammond, to explain why inflation was more than one percentage point higher than the official target. |
| Non-food sales rose 1.5% in November from the previous month, while household goods sales – which includes electrical appliances in hot demand over Black Friday – were up 2.9%. There was a 1.4% rise in sales of textiles, clothing and footwear, while food sales increased by 0.6%. | Non-food sales rose 1.5% in November from the previous month, while household goods sales – which includes electrical appliances in hot demand over Black Friday – were up 2.9%. There was a 1.4% rise in sales of textiles, clothing and footwear, while food sales increased by 0.6%. |
| The monthly sales figures also show the increasing importance of online shopping in the UK, with an increase in average weekly spending of 10.2% compared with a year ago. Internet sales account for 17% of the retail sector, excluding automotive fuel, compared with 16.1% a year ago. | The monthly sales figures also show the increasing importance of online shopping in the UK, with an increase in average weekly spending of 10.2% compared with a year ago. Internet sales account for 17% of the retail sector, excluding automotive fuel, compared with 16.1% a year ago. |
| There are, however, warnings that the Black Friday lift could be short-lived because the sales encourage consumers to finish their Christmas shopping earlier in the year, which could lead to weaker sales in the traditional boom month of December. | There are, however, warnings that the Black Friday lift could be short-lived because the sales encourage consumers to finish their Christmas shopping earlier in the year, which could lead to weaker sales in the traditional boom month of December. |
| The British Retail Consortium warned there was a general downward trend for the growth in the quantity of goods sold – compared with their monetary value – in 2017, cautioning that Christmas and the new year were likely to be a testing time for the high street. | The British Retail Consortium warned there was a general downward trend for the growth in the quantity of goods sold – compared with their monetary value – in 2017, cautioning that Christmas and the new year were likely to be a testing time for the high street. |
| Ruth Gregory, a UK economist at the consultancy Capital Economics, said: “Black Friday discounting has generally led consumers to do their Christmas shopping earlier than usual, rather than making many additional purchases. So some weakening in December seems likely.” | Ruth Gregory, a UK economist at the consultancy Capital Economics, said: “Black Friday discounting has generally led consumers to do their Christmas shopping earlier than usual, rather than making many additional purchases. So some weakening in December seems likely.” |