UK retail sales were up by 0.6% on a like-for-like basis over the Christmas period, boosted by strong performance in the food retail category.
According to the British Retail Consortium (BRC), food sales increased by 2.6% on a like-for-like basis over the three months to December, and by 4.2% on a total basis, representing the highest growth since June.
In-store sales of non-food items, however, declined 3.7% on a total basis and 4.4% on a like-for-like basis during the same period.
“There was both light and dark in this year’s Christmas trading period," said Helen Dickinson, chief executive of the BRC.
"Growth in spending was in line with the, albeit modest, average for the year. However, the divergence between growth in sales of food and non-food has never been so stark."
IGD warns that this disparity is largely due to rising food prices, and that higher inflation has led to shoppers spending more on essential items, leaving less disposable income for discretionary spending.
“Food and grocery sales enjoyed another record breaking week in the run up to Christmas Day and the last time we saw a noticeably stronger year-on-year uplift in December was six years ago," said Joanne Denney-Finch, chief executive of IGD.
"This rounds off a steady and consistent year for the sector, despite growth coming mainly from inflation rather than volume increases."
Consumer Caution
Elsewhere, data from Barclaycard showed that consumer spending was up by 4% in December, above the Q4 average of 3.2%, as shoppers increased expenditure across the board.
Supermarket spending grew by 3.5%, the highest of the quarter, due to the rising food prices.
However, the company warned that Brits are cautious about the year to come, with around 42% of consumers believing that the economy will deteriorate to some extent during 2018.
“Following months of consumers ‘feeling the squeeze’ of inflation, spending in December was comparatively robust, boosting an otherwise muted quarter," said Paul Lockstone, managing director at Barclaycard.
“Much as we saw in 2017, caution continues to be the prevailing sentiment amongst Brits, however. As we head into 2018, it will be interesting to see whether consumers rein-in after Christmas in anticipation of future financial shocks, and what methods they use to help keep their budgets on track.”
Supermarket Update
In line with the data from the BRC and Barclaycard, many of the UK's supermarket chains are posting better-than-expected results for the Christmas period.
Already, Morrisons has reported a 2.8% sales increase over the period, while Aldi saw 15% growth compared to December 2016.
Tesco, Sainsbury's, Marks & Spencer, and Waitrose are expected to release their seasonal results later in the week.
Meanwhile, the latest Kantar Worldpanel results, released today, show that Tesco remains the biggest grocer in the country, with 28% market share.
The supermarket giant posted its fastest sales growth since June 2017, with sales up 3.1% in the 12 weeks to 31 December. However, Aldi and Lidl remain the UK's fastest growing supermarkets, with both posting 16.8% growth during the pre-Christmas period.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
