THE Christmas woes that faced high street retailers will be laid bare this week, with figures out today showing a drop in consumer spending last month and stoking fears of a triple-dip recession in the UK.
Data from credit card provider Visa and Markit Economics revealed that spending fell by 2 per cent year-on-year during December as shoppers kept their hands in their pockets.
Overall consumer spending – which also highlighted greater online sales figures – fell by 1.7 per cent year-on-year.
Separate figures from accountancy firm BDO’s monthly sales tracker painted a similarly gloomy picture, with a 1.9 per cent increase in like-for-like spending in December outweighed by inflation, currently running at 2.7 per cent.
Tomorrow’s monthly retail sales monitor from the British Retail Consortium (BRC) is expected to show a below-inflation rise in sales values, with no increase in volumes. Scottish Retail Consortium figures are due to follow on 16 January.
New BRC director-general Helen Dickinson has already warned retailers to expect no growth “well into 2013”.
Supermarket Morrisons will report this morning on its Christmas trading after its shares fell last week amid reports it will be one of the biggest losers.
Marks & Spencer’s stock also came under pressure as analysts feared its festive performance will not have been enough to offset recent trading woes.
BDO’s report suggested that some retailers will report higher margins over Christmas because there was no repeat of 2011’s knee-jerk price slashing. The firm’s survey analyses non-food shops that turn over between £500 million and £5m.
Last week, clothing retailer Next posted a 3.9 per cent rise in sales between 1 November and 24 December and increased its profit margins.
The John Lewis Partnership, which owns the eponymous department store chain and the Waitrose grocery operation, reported record Christmas figures.
Steve Perry, commercial director at Visa Europe, said: “The final quarter of 2012 was the first unaffected by temporary factors such as the Jubilee or the Olympics since the first quarter.
“With a decline in total consumer spending of 0.9 per cent recorded in the final quarter, the latest data are therefore suggestive of a decline in household spending, and for that matter gross domestic product (GDP).”
Chris Williamson, chief economist at Markit, said: “With consumers playing an important role in fuelling the 0.9 per cent GDP increase in the third quarter, the drop in fourth-quarter spending raises the likelihood that the economy may have contracted again.”
He added that, with inflation continuing to outstrip pay growth and worries persisting about job security, “consumer spending looks likely to remain under pressure for some time”.
The latest fears for the health of the UK’s economic recovery come after data released on Friday showed that Britain’s key services sector – which accounts for some three-quarters of output – shrank in December for the first time in two years.