Total retail sales edged up only modestly in December, new figures from the British Retail Consortium (BRC) have revealed, with shoppers hold off on big purchases.
Retail sales grew by 1.7% in December, below the three-month average growth of 2.3% and the 12-month average growth of 3.6%. It was also markedly down on the 6.9% increase seen in December 2022.
This mediocre performance was driven by sales of non-food products, which dropped by 1.5% over the three months to December. That’s steeper than the 12-month average of -0.1%.
By contrast sales of food rose by 6.8% in the three months to December, compared with the 12-month average growth of 8.1%.
Helen Dickinson OBE, chief executive of the BRC, said the festive period had “failed to make amends for a challenging year of sluggish retail sales growth”, noting that the post-Christmas sales had been unsuccessful in encouraging greater spending on things like furniture and homeware.
Dickinson added that 2024 will likely be “another challenging year”, with shoppers being constrained by high living costs and retailers having to juggle cost pressures include the rise to business rates.
“This will be compounded by other emerging issues, such as the disruption to shipments from the Far East via the Red Sea. Political parties must consider this backdrop when they set out their plans for retail in manifestos so they can help support the industry to grow, invest, and serve customers,” she concluded.
Card spending slows in line with retail sales
The BRC findings were backed by separate data from Barclays, which found that consumer card spending grew by just 2.2% in December, below both the inflation rate and November’s growth.
Spending on essential items in particular slowed, dropping from a 3.3% uplift in November to 1.8%, in large part due to falling petrol prices. In addition, the drop-off in food price inflation meant that the spending increase of 2.8% was the lowest since September 2022.
Spending on non-essential items rose 2.5%, which Barclays suggested was somewhat down to festive activities and celebrations, while there was also notable growth in the entertainment sector, driven by tickets for shows and concerts such as those for the Glastonbury Festival.
It also revealed that 22 December saw a new all-time record for transactions processed per second.
The study found that Brits are becoming more confident about their finances, with 67% now feeling confident ‒ the highest since August. What’s more, almost three quarters (73%) are confident about their ability to live within their means each month, the highest since November 2021.
Karen Johnson, head of retail at Barclays, said that while hospitality and leisure businesses would be “encouraged” by the spending growth over the month, grocery and retail spending was underwhelming, likely due to retailers starting promotional activity earlier than usual.
She continued: “While the upcoming energy price cap is weighing on Brits’ minds, the falling rate of inflation offers a glimmer of positivity and it’s encouraging to see the nation’s optimism increase slightly as we head into a new year.”
