‘ONS figures add unnecessarily to retail doom and gloom’

Retail sales fell in December – happy new year everyone from the Office for National Statistics (ONS). It was more unwelcome news for the industry and a punch-in-the-stomach moment.

After all if even food retail sales fell during Christmas month, when tables typically groan under the weight of turkeys, what does that say about wider retail prospects as businesses weigh up all those extra costs on the back of last autumn’s Budget and the willingness of shoppers to spend?

A decline in sales at Christmas would be the worst possible end to the year and start of the new one, but that’s exactly what was widely reported – ‘worst Christmas since 2013’ was just one typical headline. 

But was it really? The numbers quoted in the stories following the lead given by the ONS in how it presents the data, showed a decline month on month.

December – disappointing as it no doubt was for some retailers – didn’t look quite so bad

Certainly the immediate sales trends matter to retailers, informing their tactics as they navigate the consumer landscape.

But is that month-on-month change actually the one that matters? It’s more usual to compare one period of performance against a comparable timespan, typically year on year. That surely gives a better indicator of how performance is holding up or not.

On that basis, December – disappointing as it no doubt was for some retailers – didn’t look quite so bad.

As PwC pointed out, year on year there was a 2.9% advance in sales volumes excluding petrol, amounting to a 3.5% increase by value terms including the impact of inflation.

The impression given by the ONS data and the reaction to it was in stark contrast to the figures reported by many retailers. From Aldi to Marks & Spencer, Sainsbury’s and Tesco the message was of ‘record’ performances and ‘best ever’ Christmases. That doesn’t seem to chime with the shock performance from food indicated by the ONS.

Outside of food, retailers as diverse as ProCook and Seasalt, Next and Superdrug have all posted healthy sales rises.

When there are real issues to confront, industry leaders could surely do without the swath of negative headlines about a Christmas period that’s already over and done with

If you speak to the chief executives of any of those businesses – and it’s been a theme of the seasonal trading updates – you’d come away with no doubt that 2025 will bring some hugely unwelcome cost increases, including £7bn as a result of changes to National Insurance rules.

But if they’re starting the new year in decent shape you wouldn’t know it from the share price reaction, which is focused on prospects more than historic performance and therefore reflects ongoing concern about costs and consumer sentiment.

When there are real issues to confront, industry leaders could surely do without the swath of negative headlines about a Christmas period that’s already over and done with, and in many cases came in as expected.

The doom and gloom is hardly tonic for the troops. The multitudes of staff who worked so hard throughout Christmas and who could be forgiven for wondering whether they should be looking for new roles in other industries before the roof falls in on retail.

There’s plenty of melancholy around, so it’s frustrating that the ONS’ focus on month-on-month sales trends adds unnecessarily to the downbeat mood.

Without donning rose-tinted spectacles, to borrow from Johnny Mercer, there are reasons to accentuate the positive, eliminate – or at least contextualise – the negative and latch on to the affirmative.