Total retail sales jumped by almost seven percent in December, but price rises meant shoppers bought less but spent more.
There was also a “healthy” rise in like-for-like sales from the previous December, according to the British Retail Consortium (BRC) and accountancy firm KPMG.
Sales rose by 6.9 percent in December, against an increase of 2.1 percent in December 2021.
Mindful of rising household bills, shoppers invested in energy-saving products and warm clothing.
But the overall sales rise “is largely due to goods costing more”, said KPMG's head of retail, Paul Martin.
He added that it “masks the fact that the volume of goods that people are buying is significantly down on this time last year”.
Commenting on the latest figures, BRC chief executive, Helen Dickinson, said: “After an exceptionally challenging year which saw inflation climb and consumer confidence plummet, the uptick in spending over Christmas gave many retailers cause for cheer. Many consumers braved the cold snap and the strikes to ensure friends and families got the gifts they wanted, with energy-saving products, warm clothing and boots all selling well.”
Nonetheless, despite the stronger sales, growth remained below inflation, making December the ninth consecutive month of falling volumes.
“Retail faces further headwinds in 2023. Cost pressures show little immediate signs of waning, and consumer spending will be further constrained by increasing living costs,” said Ms Dickinson.
“Retailers are juggling big cost increases while trying to keep prices as low as possible for their customers. And, from April, they will be hit with an additional £7.5 billion energy bill should the Government’s Energy Support Scheme expire. We hope the Chancellor’s announcement this week will provide the necessary extension, or further prices rises will be inevitable.”
Added KPMG’s Mr Martin: “With Christmas behind us, retailers are facing a challenging few months, as consumers manage rising interest rates and energy prices by reducing their non-essential spending, and industrial action across a number of sectors could also impact sales. The strong demand across certain categories that has protected some retailers will undoubtedly fall away, so we can expect high street casualties as we head into the spring.
There was also a “healthy” rise in like-for-like sales from the previous December, according to the British Retail Consortium (BRC) and accountancy firm KPMG.
Sales rose by 6.9 percent in December, against an increase of 2.1 percent in December 2021.
Mindful of rising household bills, shoppers invested in energy-saving products and warm clothing.
But the overall sales rise “is largely due to goods costing more”, said KPMG's head of retail, Paul Martin.
He added that it “masks the fact that the volume of goods that people are buying is significantly down on this time last year”.
Commenting on the latest figures, BRC chief executive, Helen Dickinson, said: “After an exceptionally challenging year which saw inflation climb and consumer confidence plummet, the uptick in spending over Christmas gave many retailers cause for cheer. Many consumers braved the cold snap and the strikes to ensure friends and families got the gifts they wanted, with energy-saving products, warm clothing and boots all selling well.”
Nonetheless, despite the stronger sales, growth remained below inflation, making December the ninth consecutive month of falling volumes.
“Retail faces further headwinds in 2023. Cost pressures show little immediate signs of waning, and consumer spending will be further constrained by increasing living costs,” said Ms Dickinson.
“Retailers are juggling big cost increases while trying to keep prices as low as possible for their customers. And, from April, they will be hit with an additional £7.5 billion energy bill should the Government’s Energy Support Scheme expire. We hope the Chancellor’s announcement this week will provide the necessary extension, or further prices rises will be inevitable.”
Added KPMG’s Mr Martin: “With Christmas behind us, retailers are facing a challenging few months, as consumers manage rising interest rates and energy prices by reducing their non-essential spending, and industrial action across a number of sectors could also impact sales. The strong demand across certain categories that has protected some retailers will undoubtedly fall away, so we can expect high street casualties as we head into the spring.
“This will present opportunities and some organisations will benefit from the current situation through market-share growth and consolidation opportunities that will arise. The first half of the year will be tough for retail and a case of survival of the fittest, but we expect to see demand increase as 2023 progresses.”
