Retail sales saw the biggest drop since January 2021 in December increasing the likelihood of a technical recession in the UK.
Figures from the Office for National Statistics showed retail sales fell 3.2% in December following a rise of 1.4% in November (revised up from an increase of 1.3%).
The figure was well below City forecasts for a decline of 0.5%.
Non-food store sales fell by 3.9% in December, following a 2.7% increase in November 2023 when earlier Black Friday sales, and wider discounting, increased sales.
Food store sales fell by 3.1% and non-store retailing (predominantly online retailers) sales fell by 2.1% and automotive fuel sales fell by 1.9%.
Alex Kerr, assistant economist at Capital Economics said the figure was "far worse than expected," and "suggests that the Black Friday boost to retail sales proved short-lived."
Kerr said today’s release would subtract around 0.15 percentage points from real GDP growth in December, which increases the chances the economy may have ended 2023 in the mildest of mild recessions.
"Looking ahead, some of the drag from higher interest rates on existing mortgage holders may result in a further modest decline in real consumer spending in Q1," Kerr added.
"But we think interest rate cuts from June and the further boost to real household incomes from falling inflation will support a recovery in real consumer spending in the second half of this year."