January 5, 2018 / 12:00 AM / 2 months ago

British retailers' December sales fall for fifth year running - BDO survey

* Underlying UK sales down 2.3 pct in December - BDO

* Shop prices fell 0.6 pct - BRC

LONDON, Jan 5 (Reuters) - British shops suffered a fall in underlying sales in December for the fifth straight year, a survey showed on Friday, adding to evidence consumers are tightening their belts.

Britons are being squeezed by slow wage growth and a jump in inflation that followed the 2016 Brexit vote, prompting many forecasters to predict a further weakening in the overall economy this year after a slowdown in 2017.

Accountancy and business advisory firm BDO said its monthly High Street Sales Tracker (HSST) showed a 2.3 percent fall in like-for-like sales in December.

It said fashion sales fell 3.8 percent, while sales of homewares were up 2.5 percent.

BDO said its data reinforced reports of a last minute Christmas buying spree. It said all categories recorded year-on-year growth in the week to Dec. 24, after negative like-for-like sales in the first three weeks of December.

“With discretionary spend under pressure, shoppers have been forced to think twice before making their purchases and have shown a preference to prioritise spend on food and drink, home comforts and trips out to restaurants and bars this festive season,” Sophie Michael, BDO’s head of retail and wholesale, said.

A separate survey from the British Retail Consortium (BRC) showed shop prices fell by an annual 0.6 percent in December, the sharpest decline since March 2017, as retailers offered larger discounts for non-food goods.

By contrast, food price inflation picked up last month.

“Many non-food retailers have been keeping prices low to stimulate spending, which will undoubtedly have come at a cost to margins,” said Mike Watkins, head of retailer and business insight at Nielsen, which conducted the BRC survey.

Department store chain Debenhams issued a profit warning on Thursday after it was forced to cut prices to drive sales of Christmas gifts, illustrating the challenges facing some of Britain’s best known retailers.

But clothing seller Next, the first major British listed retailer to report on Christmas trading, beat expectations and upgraded its profit outlook.

A string of retail companies, including Tesco, Sainsbury‘s, Morrisons and Marks & Spencer , are scheduled to update on festive trading next week.

Reporting by James Davey and Andy Bruce. Editing by Jane Merriman

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