UK retail sales recorded the biggest fall since July 2016 in December, as signs emerged that British consumers had grabbed up discounts a month earlier than the traditional Christmas shopping period.
Growth in offers and discounts that emulate and coincide with the US Black Friday and Cyber Monday events in November, appeared to have boosted sales a month earlier, effectively reducing footfall in December.
It was the worst monthly performance in quantity of goods bought since the month following the UK referendum on European Union membership in 2016.
December retail sales
Data from the Office for National Statistics (ONS) showed month-on-month sales dropped 1.5% in December after a 1% gain in November.
The annual rate of sales growth dipped to 1.4% from 1.5% in November, but missed optimistic forecasts of 3% growth.
Samuel Tombs at Pantheon Macroeconomics said: "[The data] show that the surge in spending in November was driven merely by people undertaking Christmas shopping earlier than in past years, due to Black Friday."
Indeed, ONS senior statistician Rhian Murphy noted: "Retail sales continued to grow in the last three months of the year partly due to Black Friday deals boosting spending.
"Consumers continue to move Christmas purchases earlier, with higher spending in November and lower spending in December than seen in previous years."
Murphy suggested that reduced spending power had also had a negative impact on sales growth in December as annual wage growth of 2.5% lagged consumer inflation, which stood at 3% in December.
"The data add to signs that rising prices and stubbornly weak pay growth continue to erode consumer spending power and will act as a drag on the economy in 2018," said Chris Williamson, chief business economist at ISH Markit.
Murphy at the ONS added: "The longer-term picture is one of slowing growth, with increased prices squeezing people’s spending."
While the FTSE 100 ticked higher in mid-morning trade, retailers were mostly lower. Kingfisher propped up the senior index, falling 3.46% to 332.1p, while Dixons Carphone shed 2.54% to 189.9p and Next lost 0.82% to 512.3p.
Sterling was a little higher versus the dollar, up 0.07% to $1.3907, but fell 0.24% to €1.1326 against the euro.