UK retail sales dropped the most ever for a December as snowfall and higher prices undermined shopping.

Sales fell 0.8 per cent from the previous month, when they rose 0.4 per cent, the Office for National Statistics said today in London. The median forecast of 22 economists in a Bloomberg News survey was a 0.2 per cent decline.

From a year earlier, sales were unchanged, which was also the worst result for the month since records began in 1988.

The coldest December in a century kept Britons away from shops at a time when stores were counting on a sales boost from Christmas.

Retailers may face further pressure from a government increase in value-added tax on sales as inflation at an eight-month high crimps Britons' spending power.

"The bad weather must have played a role," said Azad Zangana, an economist at Schroders Investment Management in London and an ex-Treasury official. "Consumers will face a tough time this year and growth in the first quarter could be affected by the rise in VAT. We're still positive on the UK economy as we do think the jobs recovery will come through stronger than people expect."

Sales at food stores fell 0.9 per cent on the month and 3.4 per cent on the year, the biggest annual drop since records began, the statistics office said. The fall from a year earlier was largely due to the poor weather and rising prices.

The food-store price deflator, a measure of annual price changes, accelerated to 5 per cent in December, the most since May 2009. The deflator for all retail sales was 2.2 per cent.

Consumer-price inflation accelerated to 3.7 per cent in December, data this week showed. The rate may rise further after the sales-tax increase to 20 per cent from 17.5 per cent takes effect this month.

Excluding fuel, sales fell 0.3 per cent in December on the month and were up 1 per cent on the year, the
statistics office said.

Internet sales now account for 10.6 per cent of all retail sales, the most on record, compared with
7.1 per cent a year earlier. Average weekly internet sales in December amounted to £767 million.

London-based Kesa Electricals Plc, Europe's third-largest electronics retailer, said January 19th sales at stores open at least a year dropped 4 per cent in the 11 weeks to January 18th after snow dented holiday sales and the tax increase weighed on consumers.

The UK "is a very uncertain market," chief executive Officer Thierry Falque-Pierrotin said.

Bloomberg