Shock drop in supermarket food sales hits pound

Shop sales in the UK unexpectedly fell in the run up to Christmas due to a "very poor month" for food being sold in supermarkets.

Sales fell by 0.3% in December, according to official figures, well below expectations of a 0.4% rise.

Food sales sank to their lowest level for more than 10 years, but clothing shops and department stores saw a boost in trade.

The pound slipped to $1.21 from $1.22 following the figures. The shock data will add to concerns over the health of the UK economy.

Economists said the figures capped off a "disappointing" end to 2024 for the retail sector, in a period businesses typically seek to make the most money.

Alex Kerr, UK economist at Capital Economics, said the worse-than-expected sales figures were "further evidence that the economy had very little momentum at the end of last year".

But he added: "Although the economy clearly struggled at the end of last year, we doubt that will last."

Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, also suggested he expected "sales to improve in the new year".

The blow to the retail sector last month was driven by a drop in sales volumes in supermarkets, but specialist food stores, such as butchers and bakers, along with alcohol and tobacco/vaping shops also struggled, according to Hannah Finselbach, senior statistician at the Office for National Statistics, which releases the figures.

In contrast, clothing and shoe shops saw sales rise by 4.4% last month, rebounding from falls in November and October and reflecting the surge in spending pre-Christmas.