Black Friday lifts UK retail sales despite income squeeze

Black Friday discounts encouraged British consumers to increase their spending on the high street and online, despite the most protracted squeeze on household income in memory.

Officials at the Office for National Statistics said the American-inspired promotional event helped to drive a 1.1% increase in the number of goods bought in November from a month ago, with sales of electrical household appliances making the biggest contribution to growth. City economists had forecast growth of 0.4%.

The figures suggest consumers are willing to keep spending despite the sharpest rise in inflation for almost six years, driven by the higher cost of importing goods to the UK as a consequence of the pound’s weakness since the Brexit vote.

Households are also coming under pressure from weak wage growth, despite record levels of unemployment in the UK and falling net migration, which should be acting to drive up the bargaining power of British workers to demand higher wages as firms face labour shortages.

According to the Resolution Foundation thinktank, average annual pay when taking account of inflation may not return to its pre-financial crisis peak until at least 2025.

Still, the sales figures are encouraging for the health of the economy, providing a shot in the arm for retailers hit by higher inflation driving up their costs and potentially discouraging shoppers. Economists said the sales growth would help boost GDP growth in the final three months of the year.

The monthly sales figures also show the increasing importance of online shopping in the UK, with an increase in average weekly spending of 10.2% compared with a year ago. Internet sales account for 17% of the retail sector, excluding automotive fuel, compared with 16.1% a year ago.

There are, however, warnings the Black Friday lift could be shortlived due to the sales encouraging consumers to finish their Christmas shopping earlier in the year, which could lead to weaker sales in the traditional boom month of December.

Ruth Gregory, UK economist at the consultancy Capital Economics, said: “Black Friday discounting has generally led consumers to do their Christmas shopping earlier than usual, rather than making many additional purchases. So some weakening in December seems likely.”