UK Retail Sales Experience Sharp Decline Ahead of Christmas, CBI Reports

Retail Sales Plummet in December

UK retailers reported a significant downturn in annual sales volumes in December, with the Confederation of British Industry (CBI) Distributive Trades Survey indicating a rapid fall. The retail sales balance dropped to a six-month low of -44 in December 2025, a notable decrease from -32 in November. This figure fell below market expectations of -30, signifying the fastest pace of decline in sales volumes in half a year.

The CBI's Principal Economist, Martin Sartorius, stated, 'Retailers reported that annual sales volumes fell rapidly in December, as weak consumer confidence contributed to softer trading conditions in the lead-up to Christmas. Firms do not anticipate any relief in the new year, with sales expectations deteriorating to their weakest in over four years.'

Weak Consumer Confidence and Economic Headwinds

The challenging retail environment is largely attributed to persistent weak consumer confidence and broader economic pressures. While the GfK Consumer Confidence Index saw a slight improvement, rising to -17 in December from -19 in November, sentiment remains subdued and deeply pessimistic compared to historical averages. The British Retail Consortium (BRC) also noted a modest uptick in overall confidence but highlighted that expectations for retail spending continued to soften.

Factors contributing to the cautious consumer behaviour include ongoing cost-of-living pressures and high operating costs for businesses. This prolonged downturn in retail activity has been evident since mid-2023.

Broad Impact Across Retail Sectors

The decline was not isolated to specific areas, with several retail sectors experiencing significant contractions:

• Online sales: After two months of growth, online retail sales volumes slipped back into contraction, declining by -12% in December, compared to a +13% growth in November.
• Wholesale sales: These saw their steepest fall since June 2020, dropping by -50% from -31% in November.
• Total distribution sector: Encompassing retail, wholesale, and motor trades, this sector recorded its sharpest decline in sales volumes in over five years, with a balance of -46% from -35% in November.
• Supermarket sales: Data from November indicated that supermarket sales fell for the fourth consecutive month.

Official figures from the Office for National Statistics (ONS) also revealed that retail sales volumes in Great Britain unexpectedly fell by 0.1% month-on-month in November, with the impact of Black Friday being 'slightly weaker than usual'.

Bleak Outlook for Early 2026

Retailers anticipate that the challenging conditions will persist into the new year. The CBI survey projects that the retail sales balance will further deteriorate to -57 in January, marking the weakest outlook since March 2021. This suggests a gloomy start to 2026, with firms continuing to face weak demand and elevated operating costs.