November retail sales drop unexpectedly

London : UK retail sales unexpectedly fell in November for the first time in six months as the recession prompted consumers to spend less at clothing and department stores in the approach to Christmas.

Sales dropped 0.3 per cent on the month after rising 0.6 per cent in October, the Office for National Statistics said.

The median forecast was for a 0.5 per cent gain, according to a Bloomberg News survey of 28 economists.

The UK faces a "bumpy and uneven" path out of recession as unemployment keeps increasing, Bank of England policy maker Kate Barker said in an interview this week. The central bank has kept its benchmark interest rate at a record low and pledged to spend as much as £200 billion (Dh1.19 billion) on bonds to aid the economy.

"Consumers remain under pressure and they're not going out and splurging before Christmas," said Peter Dixon, an economist at Commerzbank AG in London. "The Bank of England won't be panicking on the back of this. If we do get a rebound in mid-December going into January, this will just be seen as a blip."

The pound fell as much as 0.4 per cent after the release of the data and traded at $1.6164 as of 9.42am in London. The yield on the two-year gilt fell as much as 3 basis points and traded at 1.217 per cent.

Cautious

Non-food sales fell 0.9 per cent in November, outweighing a 0.4 per cent increase in food sales, the statistics office said. Clothing and department stores led the drop. On the year, sales rose 3.1 per cent after gaining 3.7 per cent in October. JJB Sports Plc, the unprofitable sporting goods retailer, said that it was "cautious" about its performance over Christmas and the New Year and trading will "remain difficult."

Tesco Plc, the world's third-largest retailer, on December 8 reported slowing sales growth that missed analysts' estimates.

The economy has lost more than 600,000 jobs since the recession began, with the axe falling hardest on people under the age of 24. The effects of the slump will also be felt with more increases in unemployment that may continue to rise for several more quarters, Barker said.

The weakness of the job market is making it harder for Prime Minister Gordon Brown to resuscitate his popularity in time for an election which he must call by June. Barker said on December 15 that it is possible the economy may see another quarter of contraction and that pressures on inflation are mainly "downward."

Policymakers are trying to prevent inflation from undershooting the 2 per cent target in the medium term. Inflation accelerated to 1.9 per cent in November and will pick up before then dipping below the goal, the central bank's forecasts show.