Spending was below the rate of inflation in the key Christmas month as cost of living pressures hit
Beauty products were the Christmas present bestsellers while and toys and gaming also sold well, the BRC said.
Tuesday 9 January 2024 07:41, UK
Spending in the run up to Christmas was weak, latest retailer and payments card data showed, further illustrating the cost of living pressures affecting purchasing power.
When inflation was factored in, both retail sales and card payment data showed spending rose below the rate of price rises.
While the official measure of inflation was 3.9% in November, spending rose at a slower pace - UK retail sales, as calculated by retail representative British Retail Consortium (BRC) and big four accountancy firm KPMG, increased by 3.6% from 2022.
Similarly, consumer card spending was outpaced by price rises and grew just 2.3% in December 2023, compared to a year earlier, Barclay's consumer card spending figures showed.
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Positive performance in shops can be attributed to sales, said the BRC chief executive, Helen Dickinson.
"Sales saw a slight uptick in the week leading up to Christmas as consumers scrambled to purchase last minute gifts, particularly online, due to the wet weather."
Those sales lasted longer and were "deeper" than last year, said KPMG's UK head of retail, Paul Martin.
It was due to supermarket promotions that grocery price inflation fell at its fastest rate on record in December.
Such promotions and discounts are "likely to stay with us for a while", he said.
It was possibly due to earlier discounting, however, that December card spending was at a lower ebb, Barclays said, as retail spending struggled to maintain momentum built up through early discounts in November via Black Friday sales.
Outlets that offered discounts tended to perform positively.
Price cuts, for example, helped supermarkets report record revenues ahead of Christmas, according to Kantar Worldpanel which tracked sales and prices among chains.
Discount chain B&M reported on Tuesday a 5% rise in revenues over the final three months of 2023 and kept its full-year profit outlook.
The FTSE 100 group reported comparable sales growth in the UK of 1.2%.
Discounting comes due to mounting cost of living pressures, despite the rate of inflation continuing to fall.
Borrowing is at a high not seen in a decade as interest rates were hiked 14 consecutive times in an effort to bring down inflation and energy bills have not come down to pre Ukraine invasion levels.
"The festive period failed to make amends for a challenging year of sluggish retail sales growth, as weak consumer confidence continued to hold back spending," Ms Dickinson said.
Despite the slowed spending, Barclays set an all-time record for transactions processed per second on 22 December, the busiest day for Christmas shopping .
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The figures demonstrated what Christmas presents were most popular.
"In gifting, beauty products were the standout performer, and toys and gaming also sold well," Ms Dickinson added.