UK retail sales rose by 0.4% in December, defying expectations of a 0.1% decline, according to the Office for National Statistics (ONS). The unexpected growth was driven by a surge in demand for online jewellery, particularly gold and silver, amid global economic uncertainty.
Immediate Action & Core Facts
The ONS reported that December’s retail sales outperformed forecasts, reversing a 0.1% drop in November and a 0.8% decline in October. However, the final quarter of 2024 saw an overall 0.3% decline in sales compared to the previous quarter, with supermarkets and online stores underperforming.
Despite the quarterly slowdown, annual retail sales for 2024 rose by 1.3%, marking the second consecutive year of growth. However, sales remain below pre-pandemic 2019 levels.
Deeper Dive & Context
Online Jewellery Drives Growth
Online jewellers reported a significant increase in demand for gold and silver, contributing to the December uptick. Gold prices have surged to near $5,000 an ounce, driven by global economic uncertainty, making it a popular investment and gift choice.
While internet sales performed well, non-food retailers—including department, clothing, and household stores—saw a 0.9% decline in December. Supermarkets and automotive fuel sales experienced modest gains.
Consumer Confidence Rebounds
A separate survey by market research firm GfK found that consumer confidence reached its highest level since August 2024 in January, as households grew more optimistic about their finances. Economists attributed the rebound to fading uncertainty over the Chancellor Rachel Reeves’ November budget, which included delayed tax increases.
Elliott Jordan-Doak, a senior economist at Pantheon Macroeconomics, noted that the December recovery suggests consumers are regaining confidence in their personal finances.
Quarterly and Annual Trends
The ONS highlighted that the final quarter of 2024 saw a 0.3% decline in retail sales compared to the previous quarter, following a strong third quarter. However, annual sales for 2024 grew by 1.3%, with both food and non-food stores performing better than in 2023.
Despite the improvement, retail sales remain below pre-pandemic levels, reflecting ongoing challenges in the sector.