UK Retail Sales ex Fuel YoY: November 2025 Analysis and Macro Outlook
The latest UK Retail Sales ex Fuel YoY reading for November 2025 came in at 1.20%, below the 2.50% consensus estimate and down from October’s 2.30%. This slowdown signals a moderation in consumer spending growth amid tightening financial conditions and ongoing geopolitical uncertainties. Drawing on the Sigmanomics database, this report compares recent data with historical trends, explores key macroeconomic drivers, and assesses implications for monetary policy, fiscal stance, and market sentiment.
Table of Contents
The UK’s Retail Sales ex Fuel YoY growth slowed to 1.20% in November 2025, marking a notable deceleration from the 2.30% recorded in October and well below the 2.50% forecast. This figure aligns with the subdued consumer spending environment seen since mid-2025, reflecting pressures from inflation, rising interest rates, and cautious household sentiment.
Drivers this month
- Core retail sectors such as clothing and household goods showed weaker demand.
- Energy price normalization reduced fuel-related spending but did not offset overall retail weakness.
- Rising borrowing costs and tighter credit conditions constrained discretionary purchases.
Policy pulse
The 1.20% growth rate remains below the Bank of England’s inflation target range, signaling subdued consumer demand. This may reduce pressure on the central bank to hike rates further, though inflation persistence keeps tightening on the table.
Market lens
Immediate reaction: GBP/USD weakened 0.30% post-release, while UK 2-year yields edged down 5 bps, reflecting market disappointment. Retail sector equities such as TSCO also dipped modestly.
Retail Sales ex Fuel is a key gauge of consumer health, accounting for roughly 60% of UK GDP. The 1.20% YoY growth in November compares to a 12-month average of 1.90%, highlighting a slowdown from the 5.30% peak in May 2025 and the negative dip of -1.30% in June 2025 amid inflation shocks.
Historical context
- November 2025’s 1.20% is the lowest since February 2025’s 1.20%, indicating a return to early-year growth levels.
- October’s 2.30% was a rebound from September’s 1.20%, showing volatility in consumer spending.
- May 2025’s 5.30% spike reflected temporary stimulus and pent-up demand post-pandemic.
Monetary policy & financial conditions
The Bank of England’s tightening cycle, with base rates rising to 5.25%, has increased borrowing costs. Mortgage rates climbed above 6%, dampening housing-related spending and consumer credit growth. Financial conditions have tightened, reducing disposable income and retail demand.
Fiscal policy & government budget
Fiscal consolidation efforts, including reduced discretionary spending and tax adjustments, have limited household income growth. The government’s cautious budget stance constrains stimulus, reinforcing the subdued retail environment.
Chart insights
The retail sales trend shows a clear peak in mid-2025 followed by a steady decline. The recent dip below 1.50% YoY growth is consistent with tightening financial conditions and weaker consumer confidence indices. Seasonal factors appear muted this cycle.
This chart highlights a trend toward slower retail sales growth, reflecting broader macroeconomic headwinds. The reversal from October’s rebound suggests consumer spending will remain subdued near term, pressuring GDP growth and inflation dynamics.
Market lens
Immediate reaction: UK gilts rallied modestly, with 2-year yields falling 5 basis points, while the GBP weakened against the USD and EUR. Retail sector stocks such as TSCO and WMH saw slight declines, reflecting investor caution.
Looking ahead, retail sales growth faces multiple headwinds but also some upside potential. The balance of risks suggests a cautious outlook for consumer spending in early 2026.
Bullish scenario (20% probability)
- Inflation eases faster than expected, boosting real incomes.
- Monetary policy pauses or reverses tightening, lowering borrowing costs.
- Fiscal stimulus or tax relief supports disposable income.
- Retail Sales ex Fuel rebounds to 3-4% YoY by Q2 2026.
Base scenario (60% probability)
- Inflation moderates gradually, but real wage growth remains flat.
- Monetary policy remains restrictive, keeping credit tight.
- Retail sales growth stabilizes around 1-2% YoY.
- Consumer caution persists amid geopolitical risks.
Bearish scenario (20% probability)
- Inflation surprises on the upside, eroding purchasing power.
- Further monetary tightening triggers recession fears.
- Retail sales contract, falling below 0% YoY.
- Financial markets react negatively, with GBP depreciation and equity sell-offs.
Structural & long-run trends
Longer term, UK retail faces structural shifts including e-commerce growth, demographic changes, and evolving consumer preferences. These factors may dampen traditional retail sales but create opportunities in digital and experiential sectors.
The November 2025 Retail Sales ex Fuel YoY reading of 1.20% signals a cooling UK consumer sector amid tightening monetary policy and fiscal restraint. While not alarming, the slowdown highlights risks to GDP growth and inflation outlooks. Policymakers face a delicate balance between curbing inflation and supporting growth. Market participants should watch for inflation trends, central bank signals, and geopolitical developments as key drivers of retail momentum in 2026.
Key Markets Likely to React to Retail Sales ex Fuel YoY
Retail Sales ex Fuel YoY is a critical indicator for UK consumer demand, influencing currency, bond, and equity markets. The following symbols historically track or react to this data due to their exposure to UK economic conditions and consumer trends.
- TSCO – UK retail giant sensitive to consumer spending shifts.
- WMH – Retail sector ETF reflecting UK consumer sector performance.
- GBPUSD – Currency pair responsive to UK economic data and monetary policy.
- EURGBP – Cross reflecting relative UK-Eurozone economic strength.
- BTCUSD – Crypto asset often viewed as a risk barometer, sensitive to macro shifts.
Insight: Retail Sales ex Fuel YoY vs. TSCO Stock Performance Since 2020
Since 2020, TSCO’s stock price has shown a positive correlation with UK Retail Sales ex Fuel YoY growth. Periods of accelerating retail sales, such as mid-2021 and early 2025, coincided with TSCO rallies. Conversely, sales slowdowns in late 2022 and mid-2025 aligned with TSCO price dips. This relationship underscores TSCO’s sensitivity to consumer spending trends and makes it a useful proxy for retail sector health.
FAQs
- What is UK Retail Sales ex Fuel YoY?
- UK Retail Sales ex Fuel YoY measures the year-over-year change in retail sales excluding fuel, reflecting consumer spending trends.
- Why is Retail Sales ex Fuel important for the UK economy?
- It accounts for a large share of GDP and indicates consumer demand strength, influencing monetary policy and market sentiment.
- How does Retail Sales ex Fuel affect the GBP?
- Stronger retail sales typically boost GBP by signaling economic growth, while weaker sales can weigh on the currency.
Takeaway: The November 2025 1.20% Retail Sales ex Fuel YoY growth signals a cautious UK consumer outlook amid tightening financial conditions, with risks balanced between gradual recovery and potential slowdown.
The November 2025 Retail Sales ex Fuel YoY growth of 1.20% is down sharply from October’s 2.30% and below the 12-month average of 1.90%. This marks a reversal of the short-lived rebound seen last month and signals a cooling in consumer spending momentum.
Compared to the May 2025 peak of 5.30%, the current reading underscores the fading impact of earlier stimulus and inflation-driven volatility. The data suggest consumers are increasingly cautious amid higher interest rates and persistent cost-of-living pressures.