Consumer Spending - December 2023

Using the following FT article regarding consumer spending

https://on.ft.com/3TT2qTU we can highlight these main points:

  - Retail Sales Growth: 1.7% annual rate, down from 2.7% the previous month, below 12-month average of 3.6%.

  - Inflation Comparison: Sales growth lagged behind November's inflation rate of 3.9%.

  - Consumer Behavior: Trend of buying fewer goods despite spending more in nominal terms, present since second half of 2021.

  - Festive Period Impact: Weak consumer confidence continued, larger purchases such as furniture and homeware impacted.

  - Economic Outlook: Analysts monitoring for signs of recession after economic contraction in Q3 and October 2023.

Economic Indicators

  - Services Sector: Recorded strongest growth in six months in December.

  - Mortgage Approvals: Rose to a five-month high.

  - Inflation: Indications of easing pressures at year-end.

  - GDP Figures: Official data for November pending, following contraction in previous months.

My Opinion

There is little cause for concern. Given the weak consumer spending in 2023, it is logical that spending during the Christmas period, typically non-essential, would be modest.

I expect that in 2024, persistently low consumer confidence in the UK will likely impact sectors like Leisure Goods & Retailers.