Retail sales made a tentative recovery over the Christmas period as the UK emerged from its second national lockdown.
Retail sales volumes rose 0.3 per cent in December following a 4.1 per cent fall in November as the country moved into the more relaxed tier restrictions.
It is 2.7 per cent higher than February’s pre-lockdown level according to the Office for National Statistics (ONS).
It was helped by a strong month for clothing stores, which rebounded 21.5 per cent after lockdown restrictions prevented stores from opening.
Despite this optimism, clothing stores suffered a 25.1 per cent annual decline while fuel stores dipped 22.2 per cent.
Unsurprisingly non-store purchases experienced a record annual increase of 32.0 per cent for the year, while food shops recorded a staggering 79.3 per cent increase over the year.
“Booming online sales meant that retailers who had worked on strengthening their ecommerce capabilities will have reaped the rewards as many consumers completed their holiday shopping from the safety of their own homes,” said Lynda Petherick, head of retail at Accenture UK.
ONS estimates of the quantity bought over the Christmas period fell 1.9 from a year earlier the largest year-on-year fall on record.
The recovery will likely be short-lived amid a third lockdown which has seen physical stores forced to close for the foreseeable future.
““While the online players are benefiting, the high street will be desperate that once the vaccine programme is rolled out and restrictions eased once more, consumers will be ready to spend the money that they have been forced to save in earnest,” Jon Hudson, Premier Miton’s UK Equity Fund Manager said.
Separately government borrowing estimates continues at a record pace with a further £34.1bn borrowed in December, making it the third-highest monthly borrowing on record.
“With Brexit concluded, albeit rather weakly, and the vaccine rollout well underway, Rishi Sunak may be receiving the message from the backbenchers that the time is right to bring the borrowing under control,” said Paul Craig, portfolio manager at Quilter Investors.
But Sunak may be forced to announce further support if lockdown continues through the spring, with reports suggesting he is considering another furlough extension.