Britain’s retailers benefited from a sales boost in December fuelled by Christmas shopping and the World Cup, despite growing concerns over the impact of the cost of living crisis on the high street.
The British Retail Consortium (BRC) said sales growth picked up over the pivotal festive buying period, with a sharp rise on the same month in 2021, as consumers braved cold weather and strikes to ensure friends and family received the gifts they wanted.
Total sales rose by 6.9% in December compared with a year earlier, up from November’s annual growth rate of 4.2%. However, the BRC said much of the rise was a result of high inflation pushing up the value of goods being sold, masking weaker sales volumes.
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In 2022 as a whole the value of retail sales rose by 3.1%, far below the annual inflation rate of more than 10%, according to the latest figures.
With households under pressure amid the worst squeeze on living standards in decades, retailers reported stronger sales for energy-saving products, warm clothing and boots.
Separate figures from Barclays showed credit card users spread the cost of Christmas by stocking up on food and drink earlier than usual, while spending on energy soared as the temperature dropped.
Some of December’s biggest retail winners were supermarkets, led by the discounters. On Monday, Lidl revealed it had gained 1.3 million British shoppers in the Christmas period compared with a year earlier. It came after Aldi said its sales jumped by 26% in December to top £1.4bn in the UK and Ireland for the first time.
The BRC said consumers shunned big-ticket technology purchases in December, opting for energy-efficient household appliances and Christmas mainstays of clothes and beauty items. Food sales were also strong, as families gathered at home for the first Christmas since 2019 without significant Covid disruption.
Helen Dickinson, the BRC chief executive, said the Christmas spending uptick would give retailers cause for cheer but cautioned that the volume of goods being sold had fallen for the ninth consecutive month. “Retail faces further headwinds in 2023. Cost pressures show little immediate signs of waning, and consumer spending will be further constrained by increasing living costs,” she said.
According to the latest monthly snapshot from Barclays – which processes almost half of all card transactions in Britain – Christmas parties and the World Cup helped to lift takings at pubs, bars and clubs. Meanwhile, postal strikes hindered online sales, meaning shoppers headed to the high street to avoid potential delivery disruption and for last-minute gifts.
Holiday bookings for the year ahead boosted the travel industry, while sports and outdoor retailers recorded a large increase in sales in a sign of Britons buying gym wear and equipment in the winter sales to kickstart their new year health and fitness regimes.
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Total card spending rose by 4.4% in December compared with a year earlier. However, Barclays cautioned that this was significantly below the rate of inflation, while the uplift was also partly down to a favourable comparison with December 2021, when the Omicron variant of Covid-19 kept many away from high streets and hospitality venues.
The figures come amid heightened fears over the economy at the start of the year, with economists forecasting a lengthy recession amid the pressure on households from high inflation.
Greater economic uncertainty and pressure on business budgets led to a fall in hiring activity at the end of 2022, according to figures from the accountancy firm KPMG and the Recruitment and Employment Confederation. Their monthly jobs report showed growth in demand for workers cooled in December, with overall vacancies rising at the slowest rate since February 2021.
Starting salaries and wages offered for temporary staff climbed higher in response to the greater cost of living and low candidate supply. However, rates of pay growth were the softest seen for 20 months.