(Bloomberg) — UK retail sales grew more slowly than expected in November suggesting Christmas shoppers might not boost the economy in the crucial final months of the year.

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The volume of goods sold in stores and online rose 0.2% last month, with supermarket sales partly offsetting a decline in clothing buys, according to figures published by the Office for National Statistics. Economists had expected a 0.5% increase, despite wet and gloomy weather conditions that weighed on sales.

The figures dent retailers’ hopes for a turnaround during the key Christmas period, as consumers remain cautious in the wake of the Labour government’s first budget. They’re also a blow to Prime Minister Keir Starmer’s growth ambitions more broadly, with consumers making up two-thirds of the economy.

“Caution lingers, slowing momentum in the economy,” said Nicholas Found, a senior consultant at Retail Economics. “Anxiety following the Autumn Budget combined with a mild start to November delayed spending on seasonal items.”

The report caps a week of data releases suggesting the UK economy is edging toward “stagflation” — a low-growth, high-inflation environment. Inflation increase to rise above the Bank of England’s 2% target due to rising goods prices, while wage growth came in hotter than expected.

The BOE also downgraded its growth outlook as it now expects the economy flatten in the final quarter of the year.

What Bloomberg Economics Says…

“The recovery in retail sales was weak in November as fragile consumer confidence, the late timing of the Black Friday discount period and stormy weather curtailed spending. While we expect a stronger rebound in December, the weak figure further flags downside risks to our growth forecasts.”

— Bloomberg Economist Niraj Shah. Read the full REACT on the Terminal.

The official Black Friday date fell outside the ONS’s November reporting period this year, with the data adjusted to capture the effect of the change in timing. The numbers still offer some indication of demand over the major discount period as many retailers’ reported promotions started well ahead of the official start date, the ONS said.

“Households continue to adjust to higher prices, elevated interest rates and real wages growth at a meager 2%,” Found said. “Consumers are now focusing spending on carefully timed promotions and essentials, while deferring bigger purchases.”

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