According to official figures by the Office for National Statistics (ONS), retail sales volumes increased by 1.4% in November, accelerating from a 0.8% increase in October.
The figure is better than expected, with analysts having forecast that growth would remain steady at 0.8%.
The month was boosted by non-food sales in stores, which increased by 2%. The ONS said that this was particularly boosted by the 2.9% growth in sales at clothing retailers, which saw sales surpass pre-pandemic levels for the first time.
The ONS said sales volumes across retail were now 7.2% higher than levels seen in February 2020.
“Retail sales picked up in November, boosted by strong Black Friday and pre-Christmas trading,” said Heather Bovill, deputy director for surveys and economic indicators at the ONS.
“Clothing stores fared particularly well and have exceeded their pre-pandemic level for the first time. Computer, toy, and jewellery retailers also reported robust sales this month.”
“With more consumers choosing to visit the high street and retail parks, the proportion of online sales continued on a downward trend, to their lowest level since March 2020,” Bovill added.
The Monetary Policy Committee (MPC) voted by a majority to act amid pressure from the International Monetary Fund (IMF) who warned it against further delays. The MPC also voted to maintain the amount of quantitative easing at £895 billion.
According to recent data from the Office for National Statistics (ONS), inflation in the UK rocketed to its highest level in over a decade in November, climbing to 5.1%. This is a figure that comes in significantly higher than the Bank of England’s 2% target and notably above its 4.5% prediction, largely due to the rising cost of fuel, clothing, and second-hand vehicles.
"Bank staff expect inflation to remain around 5% through the majority of the winter period, and to peak at around 6% in April 2022, with that further increase accounted for predominantly by the lagged impact on utility bills of developments in wholesale gas prices," the Bank of England said.
The 5.1% figure, reported on Wednesday, sparked intrigue as to whether the Bank of England would hike interest rates despite the rapid spread of Omicron through the country. However, inflation hit a rate not expected by the Bank until spring 2022, seemingly outweighing concerns around the new coronavirus variant.
Analysts have said the increase is expected to put further pressure on the Bank of England to raise interest rates at Thursday’s meeting. However, the spread of Omicron may deter policymakers from taking such action until the beginning of 2022.
According to the Office for National Statistics, price pressure from a broad range of goods and services, though primarily petrol, clothing, and footwear, were behind the rise.
While the news caused the pound sterling to briefly go up, by 07:35 GMT, there was little difference compared with its level before the data.
On Tuesday, the International Monetary Fund predicted that UK inflation would hit approximately 5.5% in the second quarter of 2022. This would be its highest level in 30 years.
Across the globe, inflation has risen much quicker than economists had predicted. This is due to higher energy prices as well as Covid-related supply-chain issues. In the UK, post-Brexit trade has also contributed to the problem.
New data from the Office for National Statistics (ONS) shows that GDP rose just 0.1% in the month, below the 0.4% forecasted by economists, thanks to ongoing supply chain disruptions and staff shortages.
The figure remains below the pre-pandemic level of 0.5% seen in February 2020 and suggests that the UK economy was struggling even before the emergence of the Omicron variant in late November.
The ONS said that services output grew back to its pre-pandemic levels, growing 0.4% in October. Meanwhile, output in consumer-facing services was up by 0.3% on the month largely due to an 8.1% increase in the wholesale and retail trade. However, output at hotels and restaurants dropped by 5.5%.
“Growth disappointed in October, reinforcing concerns about the resilience of the UK’s economic recovery to the Omicron variant and the impact of further restrictions,” Alpesh Paleja, CBI lead economist, said.
“We need to create consistency in our approach and build confidence by reducing the oscillation between normal life and restrictions as we learn to live with the virus and its variants."
“Meanwhile, supply pressures remain acute and further rises in inflation are looming. We expect growth to build further momentum ahead, but more action is needed to address longer-term challenges, including “scarring” from COVID and poor productivity."
The ONS’ data shows that borrowing this October was the second-highest for the month since records began in 1993. While the figure came in £200 million less than October 2020, it was still £7.2 billion more than October 2019, reflecting the continuing impact of the coronavirus pandemic.
Hoa Duong, an economist at PwC, said, “public finances are not in a much stronger financial position than last month according to today’s data, with borrowing cut by about one-eighth. The end of Government subsidising the furlough scheme and Stamp Duty holiday will have contributed to this marginal reduction.”
This October, the UK government spent £78.8 billion, a sum which is £1.5 billion more than in the same month last year despite schemes introduced during the peak of the pandemic, such as the furlough scheme, coming to an end.
At the end of October 2021, public sector net debt — excluding public sector banks — sat at £2,277.6 billion, correlating to approximately 95% of gross domestic product. This is a level not seen since the early 1960s.
This figure is up from the previous month, with the ONS saying it was 5.8% ahead of pre-pandemic levels in February 2020. It marks the first monthly increase for retail sales since April when non-essential businesses were allowed to reopen their doors after months of lockdown.
Growth in retail sales was led by increased spending in non-food shops, such as sports equipment retailers and toy shops, with sales volumes up 4.2%
Grant Fitzner, ONS chief economist, said: “After five months of no growth, retail sales picked up in October. Although sales overall are above pre-pandemic levels, it remains a mixed picture.”
Fitzner said that clothes retailers reached their highest level since the beginning of the pandemic, up 6.2% over the month. Some retailers said that early Christmas shopping had helped to bolster their sales, with reports of customers buying products for the festive period earlier than usual. The shift in seasonal spending behaviour is suspected to be attributed, in part, to concerns about shortages due to supply chain issues as well as in anticipation of larger gatherings compared with the restricted gatherings last December.
The Office for National Statistics (ONS) said the rate of Consumer Prices Index (CPI) inflation jumped sharply from 3.1% in September to 4.2% in October. This is the highest level seen since December 2011 and was a much larger rise than expected.
The rise comes after gas and electricity prices in the UK have surged. Last month, regulator Ofgem increased the energy price cap by 12%.
Earlier this month, the Bank of England warned that inflation will soar to its highest level in a decade and that it is likely to hike interest rates in the coming months in an attempt to return CPI to its target of 2%. The Bank of England expects CPI to hit 4.5% in November then reach approximately 5% in April 2022, which would be the highest level since 2011.
“Inflation rose steeply in October to its highest rate in nearly a decade,” Grant Fitzner, chief economist at the ONS, said. “This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.
“Costs of goods produced by factories and the price of raw materials have also risen substantially and are now at their highest rates for at least 10 years.”
According to the Office for National Statistics, this extra boost in UK employees brought the total figure up to 29.3 million in October.
Between July and September, the official unemployment rate, which includes data from before the end of the furlough scheme, dropped by 4.3%, down 0.5 percentage points when compared with April to June. It currently remains 0.3 points above levels seen pre-pandemic.
On a quarterly basis, a record number of people in the UK have gone from being unemployed to having a job, a shift that underlines the success of the government’s furlough scheme. While the figures represent good news for workers, they add to the difficulties of employers who are struggling to recruit workers amid an ongoing labour shortage.
Compared with other G7 nations, the UK economy remains sluggish. The US economy has already excelled to its pre-pandemic level despite taking a hard knock from coronavirus. The US’s recovery has been attributed, in part, to a $1.9 trillion government spending programme to stimulate the economy.
The pound slumped as low as $1.3364, trading below a key $1.34 support level. The slump marks sterling's weakest point since December last year when the market was impacted by concerns of a no-deal Brexit.
According to data from the Office for National Statistics (ONS), the UK economy grew by 1.3% in the three months to the end of September, a figure which trails behind analyst forecasts of 1.5%.
Shortages of goods and labour had the most substantial impact on growth amid the struggle to meet the sharp rebound in demand. The biggest drivers were from the hospitality, arts and reactions, and health sectors as remaining Covid-19 restrictions were eased.
This comes following an initial tumble by the pound sterling last week, caused by the Bank of England surprising traders by leaving interest rates unchanged at record lows of 0.1% following a majority vote by the Monetary Policy Committee (MPC).
On the other hand, expectations that the Federal Reserve will raise interest rates faster than expected has seen the dollar boosted. This follows a 31-year high surge of US inflation.
According to the Office for National Statistics (ONS), Consumer Prices Index (CPI) inflation dropped to 3.1% in September, having stood at 3.2% in August. Analysts had predicted that inflation was likely to remain flat at 3.2% for the month. However, despite the improvement, the figure remains significantly above the Bank of England’s 2% target rate.
Mike Hardie, head of prices at the ONS, said, “Annual inflation fell back a little in September due to the unwinding effect of last year’s Eat Out to Help Out, which was a factor in pushing up the rate in August.
“However, this was partially offset by most other categories, including price rises for furniture and household goods, and food prices falling more slowly than this time last year.
“The costs of goods produced by factories rose again, with metals and machinery showing a notable price rise.
"Road freight costs for UK businesses also continued to rise across the summer.”
This September, the average price of petrol stood at 134.9 pence per litre, while a year earlier a litre cost 113.3 pence, said the ONS.
The Office for National Statistics (ONS) said that gross domestic product (GDP) rose by 5.5% from April to June, having been revised up from the initial estimation of 4.8%. This means that GDP was 3.3% below where it was in the last quarter of 2019 before the start of the pandemic, against the 4.4% which had been previously estimated.
Household spending was the largest driver of the upward GDP revision, which contributed 4 percentage points of the 5.5% increase as lockdown restrictions eased in the spring, allowing outdoor dining and a return to in-person shopping.
However, although pent-up demand following the early 2021 lockdown saw Brits up their spending, more recent GDP figures suggest a marked slowdown in the growth recovery. According to figures from earlier this month, economic growth eased to 0.1% in July, down from 1.4% in June. Many fear that supply chain problems will continue to add to the slowing recovery.
Deputy national statistician at the ONS, Jonathan Athow, said: “The economy grew more in the second quarter than previously estimated, with the latest data showing health services and the arts performing better than initially thought.
“The revised figures also show households have been saving less in recent years than previously thought. Household saving fell particularly strongly in the latest quarter from the record highs seen during the pandemic, as many people were again able to spend on shopping, eating out and driving their cars.”
The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation increased from 2% in July to 3.2% in August. This is the highest since March 2012 and is the largest increase since records began in 1997. The ONS attributed the jump to discounts seen across the hospitality sector last August under the government’s Eat Out To Help Out scheme, which attempted to boost consumer spending and confidence post-lockdown.
The ONS also said there was likely to have been some impact from the supply chain crisis on inflation last month, which pushed up the prices of food and non-alcoholic drinks. However, the ONS said that the hefty increase seen in August will only be temporary.
Deputy national statistician at the ONS, Jonathan Athow, said: “August saw the largest rise in annual inflation month on month since the series was introduced almost a quarter of a century ago.
“However, much of this is likely to be temporary as last year restaurant and cafe prices fell substantially due to the Eat Out to Help Out scheme, while this year prices rose.”
