Christmas season sales 'below par'

Christmas high streetSales for the Christmas season have been "below par" as families try to make their budgets stretch as far as possible, the CBI has said.

Its distributive trades survey revealed the balance of retailers reporting that sales were up year-on-year fell back to a worse-than-expected 19% this month, from a five-month high of 33% in November.

Recreational goods such as toys, books, games and sportswear were the biggest contributor to the decline and there was also a big decline in sales of "big ticket" items for the home such as fridges and washing machines.

CBI's panel chairman Judith McKenna said it was notable that sales volumes were below par for the festive season and that ongoing economic fragility was maintaining the squeeze on household incomes.

Asda's chief operating officer added: "So while families are making their budgets stretch as far as possible for the Christmas season, the Christmas spending spirit can only go so far."

Supermarkets have benefited from the frugal spending patterns with the CBI reporting an eighth consecutive month of rising year-on-year grocery sales ahead of Christmas, with clothes sales also picking up 39%.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "A serious battle of wills may well be taking place between consumers and retailers.

"Many consumers may be holding off from doing their Christmas shopping until virtually the last moment in the hope that worried retailers will offer more and more discounts and promotions. However, many retailers may be reluctant to do so due to the hit that their margins will take, and are holding firm in the hope that many consumers will buy at the last minute."

The news will further fuel fears that the UK economy will contract in the fourth quarter of 2012, as spending is squeezed by rising inflation. The CBI survey also revealed sales growth was expected to lose steam in January, with just 10% of retailers expecting a rise in sales volumes.

The poor Christmas figures come at the end of a tough year for the high street which saw the collapse of a number of high profile high street names. Electrical goods retailer Comet, which went into administration in November, closed its doors for the last time on Tuesday.
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