Data released earlier today showed that UK December Retail Sales volumes declined by 1.0% m/m in December, on a quarterly basis, retail sales grew by 1.1% q/q in Q4 15, similar to 1.0% q/q in Q3 15. Meanwhile, the November upside surprise was marginally revised down by 0.5pp to 1.3% m/m.
Downside surprise in retailing suggests that UK Q4 private consumption likely to remain slow. Also, decelerating nominal wage growth and only gradual inflation pick-up in 2016 is likely to weigh further on households' spending habits, eating further into consumption.
"Today's print supports our baseline scenario that private consumption growth should print at 0.6% q/q in Q4 15 (down 0.2pp from Q3 15)," notes Barclays in a research note.
