Retailers had a miserable end to 2023. Volume sales slumped fully 3.2 percent on the month, much steeper than the market consensus and their worst performance since the Covid lockdown in January 2021. The decline easily more than reversed November's marginally stronger revised 1.4 percent gain and left purchases at their weakest level since May 2020. Annual growth was minus 2.4 percent, down from 0.2 percent.

Excluding auto fuel, the picture was much the same with sales down fully 3.3 percent versus the previous month and 2.1 percent lower on the year.

December's monthly nosedive reflected a 3.1 percent fall in sales of food and a 3.9 percent drop in non-food (ex-auto fuel) demand. Within the latter, losses were broad-based including a 7.1 percent collapse in non-specialised stores and a 4.5 percent decrease in the other stores category. Bad weather may have had an impact but elsewhere, non-store retailing was also down 2.1 percent. Auto fuel declined 1.9 percent.

Today's update leaves overall volumes falling a quarterly 0.9 percent after a 1.0 percent slide in the previous period and will be seen as adding to pressure on the BoE MPC to cut Bank Rate sooner rather than later. It also trims the UK RPI to 1 and the RPI-P to minus 9. Economic activity is beginning to struggle to keep up with market expectations again.

Retail sales in December are expected to fall 0.5 percent on the month after jumping a surprising 1.3 percent in November which more than doubled the consensus.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.