Retail sales volumes rose 0.4% in December 2025, following a fall of 0.1% in November 2025 and a fall of 0.8% in October 2025, according to the latest figures from the ONS. Non-store retailers’ volumes rose in December 2025, following falls in October and November, with online jewellers reporting that demand for precious metals picked up in December.
Retail sales are estimated to have fallen by 0.3% in Quarter 4 (Oct to Dec) 2025 compared with Quarter 3 (July to Sept) 2025. Supermarkets and non-store retailers’ sales both fell following a strong Quarter 3 2025.
Annual sales volumes rose 1.3% over the year to 2025, with increases in both food and non-food stores, as well as non-store retailers.
Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, said: “With no major shocks to consumers in the Autumn Budget, this prompted households to loosen the reins on spending in December giving retail sales a post-budget boost. Cost-conscious consumers also took advantage of December sales as retailers pressed the button early on discounting in a bid to shift stock.
“Despite the post-budget bounce, the overall Golden Quarter was disappointing for retailers as uncertainty dragged on sales in the run up to the festive period.
“Food sales were propped up by households stocking up on festive food ahead of Christmas celebrations. Online sales also saw a boost, likely driven by emerging platforms, such as TikTok shop, which are quickly gaining momentum.
“While consumer confidence shows signs of improvement, households remain cautious – taking a saving-over-spending approach. This pain is likely to continue for retailers in the first quarter of the year, but there are hopes that consumer spending picks up in the second half of 2026, helped by easing inflation and another interest rate cut – boosting consumer confidence and spending.
“That said, retailers are set to be hit with an influx of costs rises in the form of business rates and national minimum wage from April. In an increasingly competitive market, it’s imperative they stay ahead of the game by keeping pace with emerging trends, focusing on what their target market truly values, closely monitoring their cost base and leveraging technology to create efficiencies. 2026 is the year where protecting margins becomes ever more critical for retailers’ success.”
Thomas Pugh, chief economist at RSM UK, added: “The rise in both retail sales volumes in December and consumer confidence to -16 in January is a good sign that confidence and spending should improve now that the budget and all its associated uncertainty is in the rear-view mirror. What’s more, retailers managed to increase sales without resorting to heavy discounting as annual price inflation rebounded to 1.6%.
“However, the outlook for consumers is looking a bit tougher this year. A weakening labour market combined with still high inflation means real household incomes are likely to grow by less than 1% in 2026. The outlook for spending hinges on whether consumers continue with their current elevated levels of saving or pare back on this to support consumption. With the household saving ratio elevated and balance sheets in aggregate looking healthy, there is plenty of room for consumers to save a little less and spend a bit more, but only if they are confident enough. A disruptive leadership contest, which opens the door to another round of tax increases, is a significant downside risk to confidence continuing to recover.”
Oliver Vernon-Harcourt, head of retail at Deloitte, said: “Retail sales were better than expected in the final month of the year, capturing the height of Christmas trading. Some consumers allocated more budget towards spending on gifts and festive treats, with jewellers reporting that precious metals continue to drive demand. Meanwhile, the sizeable increase in online sales represents a flurry of last-minute shopping.
“While 2025 as a whole showed growth, sales volumes still remain below levels seen pre-pandemic. Equally, the last three months, capturing the Golden Quarter, were also disappointing for retailers, with a quarterly drop of 0.3% highlighting cautious consumer spending.
“The outlook for retail in 2026 remains a mixed bag. Some consumers are feeling buoyed by steadying interest rates and inflation, while others continue to adopt more cautious behaviours when making purchasing decisions. Sales and discounts are a priority for many, and retailers will be looking to balance creating value for consumers while seeking ways to attract spending. A positive start to 2026 would be a welcome lift for retailers as they navigate rising costs of their own.”
