Christmas sales failed to match the pace of overall UK inflation in December, early data from industry bodies indicated on Tuesday.
As the cost of living crisis put a higher price tag on this year’s festive season, the British Retail Consortium, a trade association, reported that the value of its members’ total sales — mostly big supermarkets and chains — rose by 6.9 per cent last month compared with December 2021.
But despite stronger sales values, exceeding the three-month average of 4.4 per cent, “growth remained below inflation”, said BRC chief executive Helen Dickinson. December marked the “ninth consecutive month of falling volumes”.
Consumer price inflation stood at 10.7 per cent in November, having dipped for the first time in 18 months, down from October’s 41-year high of 11.1 per cent.
The gloomy message from retailers was reflected in separate data from payments company Barclaycard, also published on Tuesday, which suggested that the surging costs of essentials had forced households to dial back on discretionary purchases.
According to Barclaycard, which gathers figures from almost half of the UK’s credit and debit card transactions, consumer card spending was 4.4 per cent up on December 2021. It also surpassed November’s annual spending growth of 3.9 per cent.
But despite the Christmas boost, spending trailed far behind the level of inflation. Outgoings on utilities climbed 40.6 per cent in December, as the cold snap prompted more households to increase their heating, leaving people with less budget room for gifts and holiday activities.
Yet, “the retail, travel and hospitality sectors all saw noticeable growth in December”, said Esme Harwood, a director at Barclays. People spent more on going out last month, with pubs, bars and clubs enjoying their biggest uplift since May 2022, as Christmas parties and the World Cup boosted takings.
Restaurants reported a fall of 3.9 per cent compared with 2021, but this was still significantly better on the 10.3 per cent year-on-year decline in November.
The rate of inflation is expected to have fallen further in December, with the Office for National Statistics set to release official figures next week. But the fall in the annual rate will not bring prices down, leaving households still exposed to cost of living pressure.
“Cost pressures show little immediate signs of waning, and consumer spending will be further constrained by increasing living costs,” noted Dickinson.
Growing business pessimism was reflected in the UK labour market, which softened at the end of 2022, according to a survey of recruiters that showed placements of permanent staff fell at the fastest rate in almost two years in December.
The monthly survey, published on Tuesday by KPMG and the Recruitment & Employment Confederation, found that uncertainty and budget pressure had weighed on demand for staff, while potential candidates were increasingly nervous of moving jobs during the downturn.
Vacancies continued to rise in December as employers took on more temporary staff, but most recruiters said permanent worker appointments were falling. This marked the third consecutive monthly decline — the sharpest seen since January 2021, when the UK was entering its third lockdown.
Source: Economy - ft.com
