- Retail sales fell 3.2% in December – the largest monthly fall since January 2021 when Covid restrictions were in place
- Non-food sales fell 3.9% with many shoppers having spent up on Black Friday
- Food sales were also down 3.1% despite festive feasting
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK retail sales figures:
“Retailer after retailer has been warning that this Christmas has been a tough one and these figures lay bare just how hard things have been. Not since January 2021 when people’s ability to shop was curtailed by Covid lockdowns has such a drop off in spend been recorded, and remember that was post-Christmas rather than at the sharp end of the crucial ‘golden quarter’.
“People shopped early, spreading the cost of gift buying and making the most of the big discounts on offer during Black Friday sales. Any hopes that as the big day drew nearer shoppers would rush to stores to make sure Santa’s sleigh was suitably stocked were quickly dashed as consumers battered by months and months of budgetary pressures decided to simply spend less on stuff. Social media was full of tips on how to have those tricky conversations with friends and family about setting budgets or agreeing to a secret Santa in order to keep costs down.
“Even the festive feast fell victim to frugality, with people plumping for little luxuries or curbing celebrations to a single day rather than many. Online retailers did get a boost in terms of the proportion of sales they nabbed, but then this year they weren’t hampered by postal strikes.
“The big question is did people spend their money elsewhere or not all? The answer to that is likely to be the deciding factor in whether or not the UK has fallen into a technical recession.
“We know pub groups like Mitchells & Butlers enjoyed a record-breaking Christmas, with pub grub being the choice of hundreds of thousands of people wanting to enjoy the big day without the big cook. Since Covid when all consumers could spend their cash on was discretionary items, people have been rethinking their priorities and choosing experiences over material goods.
“Raising the cost of borrowing was supposed to hurt, it was designed to stop us from spending, and it seems to have worked. But there will be casualties and the retail sector looks likely to be one of the biggest.”
