UK retail sales drop unexpectedly as economy struggles

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Retail sales in the UK were weaker than expected in November, reflecting a subdued mood among consumers as growth sputtered and joblessness rose.

Sales volumes edged lower by 0.1 per cent on the month, following a revised decline of 0.9 per cent in October, according to the Office for National Statistics. Analysts polled by Reuters had predicted an increase of 0.4 per cent for last month.

The muted activity came in a month overshadowed by Chancellor Rachel Reeves’ second budget. She announced further tax increases on top of the £40bn package in October 2024 as she seeks to fund higher welfare spending and bolster her fiscal headroom.

Savings rates are high and spending has been muted as UK households seek to strengthen their personal finances in the wake of the pandemic and energy-price shocks.

The Bank of England on Thursday lowered interest rates to 3.75 per cent in response to slowing inflation and subdued demand.