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UK retail spending rose on the lowest tempo for seven months in December and beneath the speed of inflation, pointing to a “drab” Christmas interval for retailers as customers continued to really feel the affect of elevated dwelling prices.
The worth of retail gross sales elevated by an annual price of 1.2 per cent final month, down from 1.4 per cent in November and the bottom studying since 1 per cent in Could final 12 months, in keeping with the British Retail Consortium.
Helen Dickinson, chief government of the commerce physique, mentioned retailers had had a “drab Christmas”, with non-food gross sales falling flat within the run-up to December 25 and gifting gadgets comparable to electronics “doing worse than anticipated”.
Customers had been “cautious” and “squeezed by the rising price of dwelling”, she added, with many holding off for reductions within the Boxing Day and New Yr gross sales.
Buying and selling updates previously week from a few of the UK’s largest retailers, together with Tesco, J Sainsbury and Primark, have bolstered the downbeat outlook. Bosses have indicated that whereas customers splashed out on festive meals outlets, they’ve been hesitant to pay full costs for basic merchandise comparable to clothes, furnishings and electronics.
Simon Roberts, chief government of Sainsbury’s, mentioned greater dwelling prices and inflation meant customers had been “on the lookout for worth for cash in the entire spending choices that they take”.
Retail bosses have additionally blamed weeks of hypothesis over tax rises within the run-up to Rachel Reeves’ November Finances for damping shopper confidence within the so-called golden quarter.
In accordance with the BRC knowledge printed on Tuesday, the worth of gross sales rose 2.3 per cent throughout 2025. The figures for each December and final 12 months had been beneath the newest inflation price of three.2 per cent and the three.4 per cent estimated for 2025, indicating that customers lower the amount of their purchases.
Non-food gross sales fell by an annual price of 0.3 per cent in December, the BRC figures confirmed, nicely beneath the 12-month common development of 1.1 per cent. As an alternative, excessive meals inflation, which in November stood at 4.2 per cent, boosted meals gross sales to an annual price of three.1 per cent.
The information, collected by the BRC with consultancy KPMG, got here forward of official retail knowledge on January 23 and suggests a lacklustre finish to 2025, extending a weak post-Covid restoration.
Within the third quarter of final 12 months, UK family consumption per head was nonetheless beneath the identical interval in 2019, earlier than the pandemic, as excessive borrowing prices, rising unemployment and better taxes weighed on sentiment and spending.
The BRC figures chime with separate knowledge on Tuesday from Barclays, which discovered that shopper spending fell by an annual price of 1.7 per cent in December, after a 1.1 per cent decline in November.
Jack That means, economist at Barclays, mentioned: “These numbers recommend 2025 ended with a whimper, following the slowdown we noticed outline final 12 months.”
However a pointy slowdown in inflation within the first half of 2026, together with additional rate of interest cuts by the Financial institution of England, “ought to present customers with respite, unlocking actual spending energy”, he added.
