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Dow Jones Newswires: U.K. retail sales rose in November on year, but inflation weighs

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Retail sales in the U.K. rose in November compared with the year before, according to the latest report by KPMG and the British Retail Consortium–though given high inflation rates, the rise masked a much larger drop in volumes.

British retail sales between Oct. 30 and Nov. 26 rose 4.2% compared with the same period a year before, the report found. This was below the 5.0% noted in November 2021, but exceeds the three-month average growth rate of 2.6%.

However, given both November and October saw inflation running at historically high levels, the small rise in sales masked a much larger drop in volumes once inflation is accounted for, the BRC said.

“Despite facing huge cost pressures, retailers are doing all they can to keep prices affordable for all their customers, [and] the cost-of-living crisis means many families might dial back their festive plans. Yet, with three weeks to go, there is still plenty of time for the Christmas cheer to bring sales home this Christmas,” BRC Chief Executive Helen Dickinson said.

Over the three months to November, nonfood retail sales were flat on a total basis and fell 0.4% on a like-for-like basis when compared with the same period a year before, according to the report.

In-store sales of nonfood items increased 2.2% on a total basis and 1.6% on a like-for-like basis, but remained well below the 12-month total average of 26.6%. Online nonfood sales fell by 0.4% in November, compared to a drop of 17.9% a year prior, reflecting post-pandemic normalization over 2021.

“Household appliances, footwear and furniture saw positive sales growth both in store and online as consumers sought out good deals on designer items and started to prepare for Christmas gatherings at home. However, some categories such as toys, computing and baby equipment have now seen several months of negative sales figures that even the festive boost hasn’t been able to reverse,” KPMG analyst Paul Martin said.

The last, crucial few weeks of the year will see retailers hoping consumers focus on the Christmas feel-good factor, and will be critical to the survival of some struggling companies.

“Given the economic headwinds for the year ahead, with consumer behavior expected to evolve further as shoppers look to trade down and purchase less, understanding and meeting customer needs will be mission critical for retailers, and it is a job that keeps getting harder,” Mr. Martin said.

Write to Joe Hoppe at joseph.hoppe@wsj.com

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