UK retail sales held up in December despite fears over the Omicron variant of coronavirus (COVID-19), but rising living costs pose significant challenges ahead for retailers.
Total sales rose by 2.1% in December compared with the same month a year earlier and were 4.6% higher on two years ago, before the pandemic, according to the latest figures from the BRC-KPMG retail sales monitor.
Total sales grew by 9.9% in 2021 as a whole compared with the year before and were up by 6.6% compared with pre-pandemic 2019.
But rising inflation, tax increases and the impact of labour shortages and global supply chain disruptions are like to affect consumer spending this year.
“Retail faces significant headwinds in 2022, as consumer spending is held back by rising inflation, increasing energy bills, and April’s national insurance hike,” said Helen Dickinson, chief executive of the British Retail Consortium (BRC).
“It will take continued agility and resilience if they are to battle the storm ahead, while also tackling issues from labour shortages to rising transport and logistics costs.”
Over the three months to December, total food sales increased by 0.4%, while non-food retail sales rose 4.8%.
Clothing and jewellery dominated Christmas gift buying. Sales of loungewear rose as people were told to work from home, while spending on formalwear slowed as social events were cancelled.
Non-food online sales fell 13.9% last month, as shoppers returned to physical stores. However, for the year as a whole, online sales grew by 14.3% compared with 2020.
Separate figures from Barclaycard showed consumer card spending rose 12.2% in December, driven by supermarket shopping as people stocked up on food and drink for the festive season.
But the hospitality sector was hit by Omicron concerns, with spending at restaurants falling 14.1% against pre-pandemic levels in 2019.