Christmas did very little to boost UK retail sales in December

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3 min read
Shoppers walk past Christmas decorations in New Bond Street, London. Photo: Pietro Recchia/SOPA/LightRocket via Getty
Shoppers walk past Christmas decorations in New Bond Street, London. Photo: Pietro Recchia/SOPA/LightRocket via Getty

British retailers had little to be thankful for this Christmas, with sales barely inching higher in December despite the end of lockdown.

Official data published on Friday showed sales, excluding fuel, grew by just 0.4% in December. Economists had forecast month-on-month growth of 0.8%.

“The recovery in retail sales fell flat in December,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

The tepid rise in sales came despite the end of November’s lockdown on 2 December. Sales had slumped 2.6% in November during the month-long shutdown.

“During December, there was initially a period of eased restrictions early in the month, however, there followed a number of tighter restrictions to non-essential retail in England, Scotland and Wales later in the month,” the ONS said.

“Feedback from retailers suggested that these enforced closures later in the month affected turnover, though not to the same extent as witnessed in November.”

Helen Dickinson, chief executive of the British Retail Consortium, said: “There was no Christmas cheer for retail as the industry found itself in the firing line for last minute coronavirus restrictions.

“Last minute Christmas restrictions deprived shops of much needed sales, and even food sales growth slowed significantly.”

Retail sales were largely flat in December. Photo: ONS
Retail sales were largely flat in December. Photo: ONS

Clothing stores saw sales rebound by 21.5% in December, after a fall of 19.6% in November.

“Despite the monthly recovery, sales in the sector are still 14.2% lower than December 2019 and continue to remain at a lower level than before the pandemic struck,” the ONS said.

December’s data means the volume of retail sales fell by 1.9% across the whole of 2020 — the largest annual fall on record, according to the Office for National December. Clothing stores, petrol stations, and department stores suffered the biggest declines.

Not everyone struggled. Lockdowns have been a boon for online retailers and online sales grew by 46.1% last year, the Office for National Statistics said. That was the fastest annual growth since 2008.

The UK returned to lockdown at the start of January in responses to a rapidly spreading new strain of COVID-19. Real time data shows retail spending have fallen since then.

WATCH: Major retailers to return £1.8bn in business rates relief

READ MORE: UK borrows another £34bn as chancellor vows return to 'sustainable footing'

Credit and debit card payment data, published by the Office for National Statistics on Thursday, showed spending fell sharply after Christmas and has remained depressed. Purchases are currently around 35% below pre-pandemic levels. Visits to high street, retail parks, and shopping centres have fallen by 66%.

Earlier on Friday, market research firm GfK said consumer confidence was -28 in January, down from -26 in December.

“The sharp deterioration in near-real time data lead us to conclude that retail sales volumes will fall by about 5% month-to-month in January,” Tombs said.

“With non-essential retailers unlikely to get the green light to reopen until March at the earliest, Q1 will put many of them into the red, triggering more insolvencies over the coming months.”

Dickinson said: “With no end in sight for retailers closed in lockdown, many will struggle to survive under a mounting rent burden, and a return to full business rates in April.

“Decisive action is needed to save jobs, shops and local communities, with town and city centres looking to be particularly hard hit unless the Government acts now.”

WATCH: What is inflation and why is it important?