UK retail sales suffer biggest drop in three years as shoppers cut spending
New data suggests that British shops had a quiet Christmas, with the amount of goods sold dropping at its fastest rate in three years.
This is due to families doing their Christmas shopping earlier in the year. Sales volumes dipped by 3.2% in December, according to data from the Office for National Statistics (ONS). This was down from a rise of 1.4% a month before.
The ONS suggested that customers did more Christmas shopping than usual in November, possibly taking advantage of Black Friday sales. As a result, December saw the biggest drop in sales for the retail sector since January 2021, when the country was still under Covid-19 restrictions.
This drop was much worse than the 0.5% drop that economists had forecast on average, according to estimates supplied by Pantheon Macroeconomics. The value of the items that customers bought also dropped, by 3.6%, the ONS said.
"Following a strong November, retail sales plummeted in December with all types of outlets being hit," said the ONS's Heather Bovill. "This was the largest overall monthly fall since January 2021, when the reintroduction of pandemic restrictions knocked sales heavily."
Shop prices 'are yet to peak and will remain high' as inflation hits new heights
Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales. Food shops saw their sales volumes down by 3.1% while sales in non-food shops were 3.9% lower.
Department stores took a big hit as sales plummeted 7.1% during the quiet festive season. Food store sales also fell by 3.1% in December 2023, a visible dip from November's rise of 1.1%.
Ms Bovill said: "Department stores, clothing shops and household goods retailers reported sluggish sales too as consumers spent less on Christmas gifts, but had also purchased earlier during Black Friday promotions, to help spread the cost. The longer-term picture remains subdued, with quarterly sales dipping, while annual sales volumes fell for the second consecutive year, to their lowest level in five years."
However, Silvia Rindone from consultancy EY UK and Ireland is hopeful of an upturn: "Although Christmas 2023 may not have yielded the sales retailers were hoping for, there are reasons to be optimistic as we enter 2024. Real wages are set to grow again as inflation continues to fall, energy prices remain stable and interest rates are likely to have peaked for the time being, all of which could lead to increased consumer spending."
She added: "Non-food retailers who have taken the time to understand their customers' priorities and evolve their proposition are reaping the benefits and standing out from the crowd." But she warned "This is not an easy process and many retailers are still struggling."
* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]
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