Retail sales figures mask squeeze on British household spending

LONDON, Dec. 14 (Xinhua) -- Despite good retail sales figures for November, British consumers are currently facing a real drop in wages as inflation outstrips wages growth which will likely mean a subdued trading Christmas on the High Street.

Official figures from the Office of National Statistics (ONS) for retail sales showed a 1.1 percent monthly rise in sales volumes in November, and beat the consensus expectations of economists who had pencilled in a rise of just 0.4 percent.

These figures released on Thursday also showed an annual rise of 1.6 percent in sales.

The gloomy predictions of economists had been based on a poor record of retail sales so far in 2017 which up until the beginning of October had recorded no year-on-year growth at all, and which showed -0.3 percent annual change in that month.

Electrical and household and electrical goods sales performed well, with businesses reporting extra sales from the new promotion of "Black Friday" sales, imported from the United States which take place at the end of November.

But spending on the high street may have come at the expense of non-retail spending.

One of the few available indicators of non-retail spending is new car registrations which in recent data have shown big falls in the past four months.

The Black Friday event, which has run in Britain for only the past three years, may also be an opportunity for consumers to bring forward their Christmas purchases, leading to weaker-than-usual December retail figures, traditionally the high point of the year.

The surge in retail sales in November does not signal broader consumer strength," Samuel Tombs, chief UK economist at Pantheon Macroeconomics, a London-based financial data analysis firm told Xinhua.

Tombs said official data, which have not yet been adjusted to accommodate the regularity of the "Black Friday" event are failing to fully adjust for the new seasonal pattern.

"In 2014, 2015 and 2016, the level of seasonally adjusted sales in November has been above its 12-month centred average. This strength has merely reflected people bringing forward purchases that they otherwise would have made in December or January to November, due to the discounts available on Black Friday," said Tombs.

Consumers are seeing their real disposable income being reduced as British CPI inflation hit 3.1 percent in figures released earlier this week against annual wage increases of 2.5 percent, shown in official data on Wednesday.

"With consumers enduring falling real wages, slowing employment growth, ongoing fiscal austerity and rising mortgage rates, they can't be counted on to revive the economy this time," said Tombs. Enditem