Retail Sales have reached their highest annual level in over a decade, with Black Fridayís sweeping price cuts fuelling consumerís spending bender in November.
The number of goods purchased on the high street alone climbed by 6.4% this November on the previous year, with the 28th of November particularly lucrative for businesses across the UK, according to the Office for National Statistics (ONS).
On a monthly basis, retail sales grew by 1.6%, significantly outstripping analystsí expectations of growth, with all genres of shop ranging from clothing to food raking in fruitful returns.
The sheer number of lavish purchases made further underlines the increasingly positive economic outlook taken by consumers in light of falling unemployment, above inflation wage rises and the recent fall in the price of oil.
“The recent fall in the price of oil means more purchasing power for consumers,” said Colin Bermingham, an economist at BNP Paribas.
“With inflation now falling below wage growth, real incomes are finally improving in the UK. The labour market data released this week show the wage growth is picking up, especially in the private sector. This bodes well for retail sales growth in the months ahead.
The number of electrical appliances sold grew by 32% on the previous year, representing the highest annual increase since records began, in no small part boosted by substantial discounts proffered by retailers both on Black Friday and across the entire year.
However, caution has been encouraged by many analysts regarding public interpretation of the increase in consumer activity, with many suggesting sales have been brought forward from their traditional completion dates in December and that retail figures for the traditionally buzzing last month of the year could dip. This being said, there are certainly no signs of buyer caution in the latter parts of the year, with consumers all too happy to buy into the discounts so heavily publicised over the past few months.
Yet countering this viewpoint is Richard Lowe, head of retail & wholesale at Barclays, whilst paying homage to the stimulating impact of Black Friday on Novemberís sales data, he also predicted there was more to come: ìRecent Barclays research revealed that UK retailers are predicting that this Saturday will be their biggest shopping day in store, and will be ready for the last-minute rush in the remaining days before Christmas.î
Loweís projection was echoed by David McCorquodale, head of retail at KPMG UK, who stated that he ìexpects the shops to be as busy as ever on Christmas Eve as the more disorganised amongst us buy those last minute itemsî.
Moreover, that Black Friday fell in December last year could make any straightforward comparison between the data unviable.
The price of goods themselves fell by 2% in November, in no small part due to the ongoing price war between supermarkets, representing the largest monthly fall since 2002. This fall in prices can also be seen as a reflection of the halving of oil prices, which has had a knock-on effect on the cost of petrol across the UK.
Overall, the economic outlook for the future appears optimistic indeed, with inflation falling to a 12-year low of 1% in November and wages beginning to rise in real terms fuelling greater consumer spending across the board.
However, consumers are warned to not overstep the mark as far as their personal financial freedom is concerned, with a focus on saving kept in mind for the New Year.
“The concern for the economy will be if the sense of increased financial wellbeing amongst households generates an unrealistic euphoria as we saw in the 2000s. A little financial caution this Christmas would not be a bad thing all round,” said Dean Garrett, economist at the University of Warwick.