UK retail sales plunged in December as Budget fallout spread
UK retail sales dropped during December, despite expectations of a Christmas bounce as consumers pulled back on spending.
In a worrying sign for the economy, retail sales fell 0.3 per cent in December. Analysts had pencilled in growth of 0.4 per cent.
November’s retail sales growth was also revised down by the Office for National Statistics to only 0.1 per cent from the previously stated 0.2 per cent.
“Falls in supermarkets were partly offset by a rise in non-food stores, such as clothing retailers, which rebounded from falls in recent months,” said the ONS.
Sales also fell within specialist food shops, like bakers and butchers, and alcohol and tobacco stores, leading food sales to fall 1.9 per cent in December, to the lowest levels since April 2013.
Compared with their pre-coronavirus pandemic in February 2020, retail sales volumes were down by 2.5 per cent.
Sales volumes fell by 0.8 per cent between the third and fourth quarters of 2024.
The shock retail sales reading came after figures showed the UK economy grew slower than expected in November.
Economic momentum has ground to a halt since Labour took office while business confidence has also fallen sharply, particularly in the wake of October’s Budget.
Including November’s figures, the UK economy has grown in only two of the last six months.
Commenting on the December retail sales figures, Nicholas Found, head of commercial content at Retail Economics said: “Retail sales disappointed over the golden quarter, reflecting a tough trading environment. Cautious spending defined the festive season, slowing momentum in retail. Scars from the cost-of-living crisis saw fragile consumer confidence persist in December as shoppers adapt to higher prices, prioritising value during the Christmas period.”
Oliver Vernon-Harcourt, head of retail at Deloitte, said: “Festive spending failed to provide a much-needed boost to retail in the latter part of 2024, with sales falling both month-on-month and quarterly. This worse-than-expected performance for the sector, particularly in food, reflects how nervous consumers are still making cut backs despite the easing of inflationary pressures.
The priority for retail leaders now revolves around combating looming cost increases, particularly from rising National Insurance Contributions. Consumer confidence is showing signs of resilience, but isn’t recovering at the rate needed to lift spending. Therefore, retailers must remain focused on navigating these upcoming challenges to ensure long-term profitability and stability in a very challenging environment.”