Dec. 15 (Bloomberg) -- U.K. retail sales fell more than economists forecast in November as cash-strapped households shunned price discounts and chose to save rather than spend as the prospect of another recession looms.
Sales including fuel fell 0.4 percent from October, the Office for National Statistics said today in London. The median forecast of 23 economists in a Bloomberg survey was for a 0.3 percent decline. On the year, sales were up 0.7 percent. Excluding fuel, retail sales fell 0.7 percent on the month.
The figures underline the pressure being felt by consumers as wages fail to keep pace with inflation and concern mounts that the economy is following the crisis-stricken euro region into recession. Unemployment hit a 17-year high of 2.64 million in October and is forecast to rise further next year.
“With inflation high compared to average earnings and employment falling, Britons are likely to cut back,” Samuel Tombs, an economist at Capital Economics in London, said before the release. “Things will remain tough for retailers.”
The decline last month was led by food sales and a drop in sales of household goods, jewelry, computers and carpets, the statistics office said.
In the three months through November, sales rose 0.7 percent from the previous quarter. There were upward revisions to the figures for October, with overall sales rising 1 percent on the month instead of the previously estimated 0.6 percent.
Core retail sales were up 0.5 percent on the year in November. Prices, as measured by the retail sales deflator, fell 0.2 percent on the month and were up 3.6 percent from the same month last year.
Bank of England Chief Economist Spencer Dale said in an interview this week that policy makers have scope to expand their 275 billion-pound ($426 billion) bond-buying program to aid an economy facing at least one quarter of contraction by the middle of 2012.
The downturn comes as retailers enter the crucial Christmas trading period. Deloitte LLP says sales this month will be no better than last year. The prospect of slow holiday sales has already led retailers including Debenhams Plc and William Morrison Supermarkets Plc, to start discounting as they seek to entice shoppers.
Retail shares have fallen more than 7 percent this month, compared with a fall of 2.9 percent for the FT350 Index as a whole.
Thomas Cook Group Plc, Europe’s second-largest tour operator, yesterday added to the pessimism gripping the economy by announcing plans to close 200 U.K. shops and scale back its plane fleet with the possible loss of more than 600 jobs.
--With assistance from Mark Evans in London. Editor: Andrew Atkinson
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