UK retail sales unexpectedly fell 0.3% in December, following a revised 0.1% rise in November. The decline, driven by weak food sales, adds to concerns about the economy and raises expectations for a Bank of England interest rate cut next month.

UK retail sales unexpectedly declined in December, according to official figures released on Friday. This adds to a series of disappointing economic data, strengthening expectations that the Bank of England may lower interest rates next month.

Retail sales, adjusted for the impact of Black Friday, dropped by 0.3% month-on-month in December, following a revised 0.1% increase in November, the Office for National Statistics (ONS) reported. Economists had predicted a 0.4% rise in sales from November.

The drop was largely driven by weak food sales, which fell to their lowest level since 2013, with supermarkets hit particularly hard, said ONS senior statistician Hannah Finselbach.

In response to the data, the pound slipped around a quarter of a cent against the U.S. dollar, falling below $1.22.

For the fourth quarter as a whole, retail sales were down by 0.8%, which the ONS noted could reduce economic growth by approximately 0.04 percentage points.

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