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Growth in UK retail spending was “minimal” and below the rate of inflation in the last three months of 2024, suggesting consumers remained cautious in what is usually the busiest period for shopping.
In the three months to December, sales increased by only 0.4 percent compared to the same period in 2023, when economy was in a technical recession, according to data published on Tuesday by the British Retail Consortium.
The trade body’s data was not in line with headline inflation, which stood at 2.6 percent in November, indicating that consumers reduced the amount of goods they bought during the period.
Linda Ellett, UK head of consumer, retail and leisure at consultancy KPMG, which helps compile the data, said: “Sales growth during the golden quarter from October to December was minimal, reflecting continued careful management of many household budgets at a time when many expenses remain at a high level compared to previous years.”
The sale of non-food products was particularly hard hit, which, according to the data, decreased compared to the previous year.
BRC chief executive Helen Dickinson said: “After a challenging year marked by weak consumer confidence and difficult economic conditions, the key ‘golden quarter’ failed to deliver the 2024 that retailers had hoped for.”
Tuesday was the first data on consumer spending for the shopping period covering the global Black Friday and Christmas sales event, adding to signs that the economy struggled in the final quarter of 2024.
The ministers failed heavy fire out of business since October’s budget, as bosses lament higher employers’ National Insurance contributions as well as a rise in the minimum living wage.
Muted confidence coincided with weak GDP readings, as the Bank of England estimates the economy failed to grow in the final quarter of 2024 despite a strong start.
Growth in UK manufacturing and service activity fell last month to the slowest level since October 2023, according to data released by S&P Global on Monday.
Sales in brick-and-mortar stores were particularly poor in the last three months of this year, recording a 0.1 percent increase in value and a decline in volume, according to data released Tuesday by accounting firm BDO.
Meanwhile, separate data released by Barclays showed no growth in consumer card spending in December, with contractions in supermarkets, home improvement stores and fuel spending.
The BRC forecasts sales growth of 1.2 per cent in 2025, below projected shop price inflation of 1.8 per cent.
Dickinson said estimates meant volumes were likely to fall this year, adding to pressures on businesses including a rise in the living wage and higher employers’ National Insurance contributions from April.
“With little hope of covering these costs through higher sales, retailers are likely to raise prices and reduce investment in stores and jobs, hurting our streets and the communities that rely on them,” she said.
