Omicron delivers ‘chilling’ blow to UK retail sales

UK retail sales have slowed to a crawl driven by the emergence of Omicron chilling consumer confidence, according to new research published today.

Retail sales growth slowed over the last year, rising eight per cent annually in December, down sharply from 39 per cent in November, according to the Confederation of British Industry (CBI).

Brits have shunned high streets in recent weeks in a bid to ward off catching Omicron in the run up to the Christmas period, hitting retailers hard.

Greater uncertainty over the trajectory of the UK economy ignited by the government mulling re-launching tough curbs on economic activity is clouding households’ financial outlook, weighing on spending.

Ben Jones, lead economist at the CBI, said Omicron is having a “chilling impact on activity on the high street”.

Retailers tend to rely on the seasonal upsurge in sales over the Christmas period to tip them into profitability, meaning a reduction in spending could threaten firms’ long-term viability.

However, analysts highlighted that retailers are likely to hold up well even if the government tightens curbs due to consumers acclimatising to shopping online during previous lockdowns.

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “Retail sales should be relatively immune to the impact of the Omicron variant, particularly if consumers shift spending away from services venues.”

Looming tax hikes and inflation rising even further will eat into household real income, squeezing spending in the first half of 2022, Dickens warned.