The UK’s Retail Sales ex Fuel MoM for November 2025 registered a -1.00% decline, a notable contraction compared to the previous month’s 0.60% increase and well below the -0.20% forecast. This data, sourced from the Sigmanomics database, highlights a significant cooling in consumer spending excluding volatile fuel sales. Historically, this is the sharpest monthly drop since June 2025, when sales plunged 2.80% amid inflation spikes and energy price shocks.

Drivers this month

• Rising inflation eroding real incomes, reducing discretionary spending.
• Higher Bank of England base rates tightening credit conditions.
• Supply chain normalization failing to boost consumer confidence.
• Seasonal factors less supportive than usual ahead of holiday shopping.

Policy pulse

The Bank of England’s ongoing monetary tightening, with the base rate at 5.25%, is constraining household borrowing and spending. Retail sales now sit below the 12-month average growth of 0.50%, signaling a slowdown inconsistent with the BoE’s inflation target of 2%. This contraction may prompt the central bank to pause rate hikes but maintain a hawkish stance given persistent inflation risks.

Market lens

Immediate reaction: GBP/USD fell 0.30% within the first hour post-release, while 2-year gilt yields rose 8 basis points, reflecting increased recession fears and tighter financial conditions.

Retail sales ex fuel is a core macroeconomic indicator reflecting consumer demand strength, which drives roughly 60% of UK GDP. The November print’s -1.00% MoM contraction contrasts with the 0.70% average monthly growth recorded in the first half of 2025. This slowdown aligns with other foundational indicators such as subdued PMI readings (UK Composite PMI at 48.70) and rising unemployment claims (up 3.20% MoM).

Monetary policy & financial conditions

The Bank of England’s aggressive rate hikes since late 2024 have pushed borrowing costs higher, with mortgage rates averaging 6.10%. This has dampened housing market activity and consumer credit availability, directly impacting retail sales. The tightening cycle aims to curb inflation, which remains elevated at 5.10% YoY, well above target.

Fiscal policy & government budget

Fiscal tightening through reduced discretionary spending and higher taxes has limited disposable income growth. The government’s November budget forecast a 1.80% GDP growth for 2026, down from 2.30% earlier in the year, reflecting cautious fiscal assumptions amid global uncertainties.

External shocks & geopolitical risks

Ongoing Brexit trade frictions and global supply chain disruptions continue to weigh on retail inventories and pricing. Additionally, geopolitical tensions in Eastern Europe and energy market volatility add inflationary pressures and dampen consumer sentiment.

Figure 1: UK Retail Sales ex Fuel MoM (%) — February to November 2025

• Feb: 2.10%
• Mar: 1.00%
• Apr: 0.50%
• May: 1.30%
• Jun: -2.80%
• Jul: 0.60%
• Sep (early): 0.50%
• Sep (late): 0.80%
• Oct: 0.60%
• Nov: -1.00%

Market lens

Immediate reaction: GBP/USD depreciated by 0.30%, while 2-year gilt yields climbed 8 basis points, indicating heightened recession concerns and tighter credit conditions.

Looking ahead, the UK retail sales ex fuel trajectory hinges on several key factors. We outline three scenarios:

• Bullish (20% probability): Inflation eases faster than expected, real incomes stabilize, and consumer confidence rebounds. Retail sales recover with 0.50-1.00% monthly gains by Q1 2026.
• Base (55% probability): Inflation remains sticky, monetary policy holds steady, and consumer spending grows modestly at 0-0.30% MoM, reflecting cautious optimism.
• Bearish (25% probability): Inflation spikes due to external shocks, fiscal tightening intensifies, and retail sales contract further by 0.50-1.50% monthly, risking recession.

Financial markets will closely monitor incoming data for signs of consumer resilience or further weakness. The Bank of England’s policy decisions will be critical, balancing inflation control against growth risks. Fiscal policy adjustments and geopolitical developments remain key downside risks.

Structural & long-run trends

Despite short-term volatility, structural shifts such as e-commerce growth, changing consumer preferences, and demographic trends continue to reshape UK retail. Digital sales now represent over 30% of total retail, partially insulating the sector from cyclical shocks.

The November 2025 UK Retail Sales ex Fuel MoM contraction to -1.00% signals a notable consumer slowdown amid persistent inflation and tighter monetary policy. This data point, the largest monthly drop since June, underscores the fragility of demand in the current macroeconomic environment. While risks remain skewed to the downside, structural changes and potential policy recalibrations offer some hope for stabilization in 2026.

Market participants should prepare for continued volatility in retail-related assets and closely watch upcoming inflation and labor market data. The balance of risks suggests a cautious stance, with the potential for both recovery and further retrenchment depending on external shocks and policy responses.

Key Markets Likely to React to Retail Sales ex Fuel MoM

The UK Retail Sales ex Fuel MoM figure is a bellwether for consumer demand and economic health, influencing currency, bond, equity, and commodity markets. Below are five tradable symbols historically sensitive to UK retail data:

• GBPUSD – The British pound vs. US dollar often moves sharply on UK retail data, reflecting changes in economic outlook and monetary policy expectations.
• FTSE100 – The UK’s primary equity index reacts to consumer spending trends, especially retail and consumer discretionary sectors.
• TSCO – Tesco PLC, a major UK retailer, sees stock price sensitivity to retail sales fluctuations and consumer confidence.
• BTCUSD – Bitcoin’s price often inversely correlates with risk sentiment shifts triggered by economic data surprises.
• EURGBP – The euro vs. pound pair reflects relative economic strength and policy divergence between the UK and Eurozone.

FAQs

What is UK Retail Sales ex Fuel MoM?

UK Retail Sales ex Fuel MoM measures the monthly percentage change in retail sales excluding fuel, indicating consumer spending trends.

Why is Retail Sales ex Fuel important for the UK economy?

It reflects consumer demand, a major GDP component, and influences monetary policy and market sentiment.

How does Retail Sales ex Fuel affect financial markets?

Stronger sales boost currency and equities, while weaker sales increase bond yields and risk aversion.

Takeaway: The November 2025 retail sales ex fuel contraction signals a cautious consumer environment, with significant implications for UK monetary policy and financial markets.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 11/21/25