William Schomberg

LONDON (Reuters] – British retail sales dropped in December due to consumers shopping for Christmas earlier than usual and the fact that many British residents stayed in their homes because of Omicron coronavirus.

According to economists, the impact of the disaster bolstered the belief that Omicron’s new restrictions and slowing of its spreading spread led to the contraction of the fifth largest economy in the world.

The November sales volume drop of 3.7% was more than the 0.6% predicted decline in a Reuters poll. It is also the largest fall since January last year, when the country was locked down by coronavirus.

The Office for National Statistics (ONS), Friday’s statement, stated that sales volume fell 0.9% compared to December 2020.

According to Reuters’ poll, there was a 3.4% increase in sales annually.

Heather Bovill, ONS’ Deputy Director for Research, stated that after November’s strong pre-Christmas trade, December saw a drop in retail sales across all categories. Retail feedback suggested Omicron had a negative impact on footfall.

“Plan B restrictions in England led to more people working remotely, which resulted to a significant drop in fuel sales,” she said, referring specifically to government efforts to end the pandemic.

However, retail sales are still stronger than ever before the pandemic. Over a quarter of all sales can now be made online.

Capital Economics economist Bethany Beckett said that data supports her belief that Omicron case surges in the lead-up to Christmas could have led to the economy shrinking by 0.5% or more.

Retail sales would probably recoup the hit between January and March as the government lifts its COVID restrictions but “with the UK’s cost of living crisis looming, we expect a weakening in the consumer recovery to dampen retail sales further ahead,” she said.

Beckett stated that the Bank of England would likely raise interest rates again in February for the second time in two years.

The 12. months ending December saw British consumer price inflation reach a near 30-year peak of 5.4%. The average earnings for the three months ending November were 3.8% higher than the equivalent period in 2020.

On Friday, a survey revealed that consumers’ confidence declined in January. This was the lowest point since February 2021, when the country was locked down.

According to ONS, non-food sales fell 7.1% between November and December. This is also the largest fall since January 2013.

British retail sales quickly recovered from the pandemic recession of 2020 when restrictions were lifted.

Retail executives warn that consumers will be more cautious about spending after the inflation spike and an increase in energy prices. They also fear higher interest rates in April.