The UK retail sector enjoyed a 3.2% increase in sales in December, industry data showed on Tuesday, but there was a warning that sales volumes are likely to slow this year and that prices will rise.
Sales in December bounced back from a 3.3% fall in November, with non-food sales enjoying a Christmas boost to sales after declines for most of 2024.
Like-for-like sales rose 3.1% year-on-year, which was stronger than the consensus forecast from economists, who expected a 0.2% decline.
For the three months to December, the festive period known in the trade as the Golden Quarter, sales grew just 0.4% year on year.
BRC chief Helen Dickinson said: "Following a challenging year marked by weak consumer confidence and difficult economic conditions, the crucial ‘golden quarter’ failed to give 2024 the send-off retailers were hoping for."
In December, food sales increased 1.7%, while non-food sales bounced back with 4.4% growth after a decline of 2.1% in December 2023 and above the three-month average decline of 1.1% and a 12-month average decline of 1.5%.
Over the quarter, Dickinson noted that non-food was "particularly hard-hit", with sales contracting from the previous year but food sales fared better.
She highlighted strong showings from beauty products, jewellery and electricals in the Christmas buying period.
For 2024 overall, UK retail sales increased 0.7% on the previous year, with food growth of 3.3% offsetting a decline of 1.5% in non-food.
Looking to 2025, the BRC projects sales growth to average 1.2%, below the projected shop price inflation of 1.8%.
"This means volumes are likely to fall this year, all while the regulatory and tax burden on retailers will increase costs by £7 billion from rising National Insurance contributions, increasing national living wage, confirmed in the Budget, and new packaging levies," said Dickinson.
"With little hope of covering these costs through higher sales, retailers will likely push up prices and cut investment in stores and jobs, harming our high streets and the communities that rely on them.
"Government must find ways to mitigate this, so that retailers can invest more in growth and jobs, starting with its planned business rates reform where it must ensure that no shop ends up paying higher rates than they do already."