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UK Retail Sales Accelerate in November on Clothing, Online Shopping

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UK Retail Sales Accelerate in November on Clothing, Online Shopping

Retail sales in the United Kingdom rose 0.3 percent in November, following a revised 0.9 percent decline the prior month, according to the Office for National Statistics. On an annualized basis, retail sales rose 2 percent.

Excluding fuel, retail sales accelerated 0.4 percent in November and at an annual rate of 2.3 percent. Sales were primarily driven by clothing stores, which negated the monthly decline at department stores and petrol stations. Sales at clothing stores rose 3.8 percent, as frigid temperatures boosted clothing demand. Clothing sales had declined 3.4 percent the prior month, largely attributable to milder weather. Sales at department stores fell 3.1 percent, the steepest decline since February 2011.

A growing proportion of total sales were made online, which partly explains the large drop in department store activity. Online sales increased 1.4 percent in November, representing 11.9 percent of total retail sales.

“Retail sales were in line with expectations today and revealed a decent monthly increase,” said David Tinsley of London’s BNP Paribas SA. “Over the fourth quarter as a whole the pace of retail sales has dipped, but this may reflect a pause rather than a downtrend.”

Purchasing power continues to be a challenge in the UK, as the rate of inflation continues to outpace wage growth. Consumer inflation eased to a four-year low in November, but remains well above wage growth.

The UK economy has registered three consecutive quarters of growth; gross domestic product expanded 0.8 percent in the third quarter, as recovery continues to gain traction. The unemployment rate unexpectedly fell to 7.4 percent in the three months to October, edging closer to the Bank of England’s target of 7 percent. Monetary policy will remain highly accommodative as long as the unemployment rate remains above the 7 percent threshold.

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