The festive season brought a welcome surprise for UK retailers, with official figures revealing an unexpected rebound in sales during December. This upturn was significantly bolstered by a surge in online trading, particularly for jewellery firms capitalising on soaring demand for precious metals.
December Sales Defy Expectations
The Office for National Statistics (ONS) reported that the total volume of retail sales, which measures the quantity of goods purchased, increased by 0.4% in December. This positive performance came as a surprise to many analysts who had anticipated a more subdued outcome following consecutive monthly declines in October and November.
ONS senior statistician Hannah Finselbach commented on the figures, stating: "Sales were up in December, with internet retailing doing well. Within this, online jewellers had a strong month and told us there was higher demand for gold and silver."
Online Jewellery Sector Shines
The digital marketplace proved particularly vibrant, with sales across internet retailers jumping by 4.4% – representing the most substantial monthly increase since February of the previous year. This impressive growth was largely attributed to robust sales of gold and silver jewellery, occurring against a backdrop of escalating precious metal prices.
Gold prices reached another historic peak on Friday, approaching $5,000 (£3,695) per ounce as investors continued seeking safe haven assets amidst ongoing geopolitical uncertainty. Sandra Horsfield, an economist at Investec, observed that these record prices have "encouraged some speculative buying, even by households" looking to participate in the precious metals boom.
Mixed Performance Across Retail Sectors
The overall retail landscape presented a varied picture during the crucial festive trading period. Supermarkets experienced a modest 0.2% month-on-month sales increase in December, benefiting from competitive pricing strategies. However, non-food stores faced considerable challenges, recording a 0.9% sales decline – their poorest performance since May of the previous year.
Clothing and footwear retailers were particularly affected, with sales dropping 0.7% during the month. This sectoral disparity reflects broader consumer behaviour patterns, where spending shifted from discretionary categories toward essential purchases.
Annual Context and Quarterly Challenges
Despite the December improvement, the final quarter of 2025 proved disappointing for retailers. The 0.4% rise failed to compensate for earlier declines of 0.8% in October and 0.1% in November, resulting in an overall 0.3% decrease in retail sales volume for the crucial October-December period.
Jacqueline Windsor, head of retail at PwC UK, explained: "The final quarter of the year when retailers traditionally make most of their money was a disappointment. It's now clear that consumers held back in the run-up to Christmas. Even as budget uncertainty dissipated, shoppers did not buy as much as retailers hoped."
She identified several contributing factors, including a later start to Christmas shopping and persistent grocery price inflation that compelled households to redirect spending from non-essential items toward basic necessities.
Annual Growth and Recovery Trajectory
On an annual basis, the December figures contributed to a 1.3% increase in retail sales volumes throughout 2025 – representing the strongest yearly growth since 2021. This marks the second consecutive annual rise following substantial declines in 2022 and 2023, though sales volumes remain below their pre-pandemic levels.
Finselbach noted: "Across 2025 as a whole, retail sales saw a second consecutive annual rise after the large falls of 2022 and 2023, but volumes still remained below their pre-pandemic level."
Future Outlook and Consumer Confidence
Separate data released on Friday provided some optimism for continued recovery. GfK's consumer confidence report showed a slight improvement in readings, indicating household resilience that could support future spending.
Economic analysts anticipate further support for consumer spending in the coming year. Elliott Jordan-Doak, senior UK economist at Pantheon, suggested: "We think consumers' spending should continue to recover in 2026 as policy uncertainty continues to ease, inflation falls, and the Monetary Policy Committee reduces interest rates in April."
This combination of factors – including potential interest rate reductions, diminishing inflation, and reduced policy uncertainty – could create a more favourable environment for retail recovery throughout 2026, building upon the unexpected December rebound driven by online precious metal sales.
