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UK retail spending rose at the lowest pace for seven months in December and below the rate of inflation, pointing to a “drab” Christmas period for retailers as consumers continued to feel the impact of elevated living costs.
The value of retail sales increased by an annual rate of 1.2 per cent last month, down from 1.4 per cent in November and the lowest reading since 1 per cent in May last year, according to the British Retail Consortium.
Helen Dickinson, chief executive of the trade body, said retailers had had a “drab Christmas”, with non-food sales falling flat in the run-up to December 25 and gifting items such as electronics “doing worse than expected”.
Consumers were “cautious” and “squeezed by the rising cost of living”, she added, with many holding off for discounts in the Boxing Day and New Year sales.
Trading updates in the past week from some of the UK’s largest retailers, including Tesco, J Sainsbury and Primark, have reinforced the downbeat outlook. Bosses have indicated that while consumers splashed out on festive food shops, they have been hesitant to pay full prices for general merchandise such as clothing, furniture and electronics.
Simon Roberts, chief executive of Sainsbury’s, said higher living costs and inflation meant consumers were “looking for value for money in all of the spending decisions that they take”.
Retail bosses have also blamed weeks of speculation over tax rises in the run-up to Rachel Reeves’ November Budget for damping consumer confidence in the so-called golden quarter.
According to the BRC data published on Tuesday, the value of sales rose 2.3 per cent across 2025. The figures for both December and last year were below the latest inflation rate of 3.2 per cent and the 3.4 per cent estimated for 2025, indicating that consumers cut the quantity of their purchases.
Non-food sales fell by an annual rate of 0.3 per cent in December, the BRC figures showed, well below the 12-month average growth of 1.1 per cent. Instead, high food inflation, which in November stood at 4.2 per cent, boosted food sales to an annual rate of 3.1 per cent.
The data, collected by the BRC with consultancy KPMG, came ahead of official retail data on January 23 and suggests a lacklustre end to 2025, extending a weak post-Covid recovery.
In the third quarter of last year, UK household consumption per head was still below the same period in 2019, before the pandemic, as high borrowing costs, rising unemployment and higher taxes weighed on sentiment and spending.
The BRC figures chime with separate data on Tuesday from Barclays, which found that consumer spending fell by an annual rate of 1.7 per cent in December, after a 1.1 per cent decline in November.
Jack Meaning, economist at Barclays, said: “These numbers suggest 2025 ended with a whimper, following the slowdown we saw define last year.”
But a sharp slowdown in inflation in the first half of 2026, along with further interest rate cuts by the Bank of England, “should provide consumers with respite, unlocking real spending power”, he added.
