What: UK retail sales fell unexpectedly last month, capping the worst year on record

Why it is important: Retailers should prepare for the looming recession as consumers are cutting back on spending due to inflation

The volume of goods purchased in shops and online fell 5.8% from a year ago, the sharpest December decline since records began in 1977. Economists had originally expected a 4 percent drop but with inflation, consumers are cutting back on spending due to affordability concerns. Experts suggest that consumer spending will remain under pressure going forward with the rising cost of living and increased food prices.

Retailers reported a mixed picture about sales before the official figures were released. Some companies such as Next Plc and Marks & Spencers had better-than-expected holiday sales while others like Dr Martens and ASOS struggled.

In comparison to pre-Covid levels, consumers are having to pay more to buy less as sales were reported 13.6% higher in value terms but volumes were 1.7% lower

UK retail sales had worst year on record in spending squeeze