- Written by Dearvale Jordan
- BBC News business reporter
image source, Getty Images
Retail sales fell 3.2% in December, the biggest fall since Britain went into coronavirus lockdown.
Official figures revealed a sharp decline in demand for goods, with food sales also falling ahead of Christmas.
The Office for National Statistics (ONS) said it appears people took advantage of the Black Friday sales to shop in early November.
This means retail sales fell at the fastest pace since January 2021.
The amount of non-food items people bought in December fell by 3.9%, the ONS said. In contrast, it increased by 2.7% in November.
Food demand also fell at the end of the year, falling by 3.1%. Food sales increased by 1.1% in November.
Heather Bovill, deputy director for research and economic indicators at the ONS, said December's drop in retail sales was “the biggest overall monthly decline since January 2021, when sales were hit hard by the reintroduction of pandemic restrictions.” “The largest,” he said.
He said November discounts encouraged people to shop early for Christmas, but department stores, clothing retailers and home goods stores said consumers were spending less on gifts. There was also evidence that it was decreasing.
This decline was the largest since January 2021, when additional regulations to prevent the new coronavirus were implemented, but the amount of goods people actually purchased in December was lower than the amount of goods that people actually purchased in December, when the country entered its first coronavirus lockdown. This is the lowest since May 2020.
However, one retailer that bucked the trend was specialty wine retailer Majestic, which posted record sales in the run-up to Christmas, increasing by 8%, helped by a recovery in trade with the hospitality sector.
However, chairman and chief executive John Colley told BBC Radio 4's Today program that consumers across the board remain reeling from the soaring food prices seen over the past 12 months.
“I think the effects of inflation are still there… I think consumers are still feeling the pinch and I still don’t think it’s over.”
The weaker-than-expected retail sales also increased the risk that the UK ends 2023 in “the mildest of mild recessions”, said Alex Kerr, assistant economist at Capital Economics.
A recession is usually defined as two consecutive three-month periods (or quarters) in which economic output contracts.
The UK economy contracted by 0.1% between July and September. It contracted again in October, but rebounded in November.
Mr Kerr said December's drop was “much larger” than expected, even taking into account the impact on shopping from Black Friday sales.
“This may also be due to consumers pushing their Christmas shopping forward to November,” he said. “But it is also because the impact of the cost of living crisis and sharply rising interest rates continues to weigh on real incomes and consumer spending.”
The inflation rate, which measures the rate of increase in prices, has fallen sharply since its high in October 2022.
However, the latest inflation figures show that interest rates rose slightly to 4% in December, contrary to widespread expectations that they would continue to fall.
Economists and financial markets had expected the Bank of England to cut interest rates this year, possibly in the spring.
However, recent inflation data suggests a rate cut may not occur until June. The current interest rate is 5.25%.
