British retailers saw the amount of goods they sold drop last month at its fastest rate in three years as under-pressure families shifted part of their Christmas shop to earlier in the year.
Sales volumes dipped by 3.2% in December, data from the Office for National Statistics (ONS) suggested on Friday, down from a rise of 1.4% a month before.
The ONS said that there was some evidence that customers had done more Christmas shopping than usual in November, taking advantage of Black Friday sales in some cases.
This meant that December saw the biggest drop in sales for the retail sector since January 2021, when the country was still under Covid-19 restrictions.
It was also much worse than the 0.5% drop that economists had forecast on average, according to estimates supplied by Pantheon Macroeconomics.
The value of the items that customers bought also dropped, by 3.6%, the ONS said.
“Following a strong November, retail sales plummeted in December with all types of outlets being hit,” said the ONS’s Heather Bovill.
“This was the largest overall monthly fall since January 2021, when the reintroduction of pandemic restrictions knocked sales heavily.
“Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales.”
Food shops saw their sales volumes down by 3.1% while sales in non-food shops were 3.9% lower.
Worst hit were the department stores, whose sales dropped 7.1% in a very quiet December period.
Food store sales volumes fell by 3.1% in December 2023, from an increase of 1.1% in November 2023.
Ms Bovill said: “Department stores, clothing shops and household goods retailers reported sluggish sales too as consumers spent less on Christmas gifts, but had also purchased earlier during Black Friday promotions, to help spread the cost.
“The longer-term picture remains subdued, with quarterly sales dipping, while annual sales volumes fell for the second consecutive year, to their lowest level in five years.”
Silvia Rindone, retail lead for consultancy EY in the UK and Ireland, said: “Although Christmas 2023 may not have yielded the sales retailers were hoping for, there are reasons to be optimistic as we enter 2024.
“Real wages are set to grow again as inflation continues to fall, energy prices remain stable and interest rates are likely to have peaked for the time being, all of which could lead to increased consumer spending.
“Non-food retailers who have taken the time to understand their customers’ priorities and evolve their proposition are reaping the benefits and standing out from the crowd.
“This is not an easy process and many retailers are still struggling.”
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