Festive Retail Rebound Powered by Online Gold and Silver Demand
The UK retail sector experienced a welcome festive uplift in December, with official figures revealing a 0.4% increase in sales volumes, driven significantly by a surge in online jewellery purchases, particularly for gold and silver items. This performance defied earlier expectations of a more subdued Christmas trading period, marking a positive end to a challenging year for retailers.
Online Jewellery Shines Amid Record Precious Metal Prices
The Office for National Statistics (ONS) reported that internet retailing saw a substantial 4.4% rise in December, the largest increase since February of the previous year. This boost was largely attributed to robust demand for gold and silver jewellery, coinciding with soaring precious metal prices. Gold, in particular, reached a fresh all-time high, approaching $5,000 (£3,695) per ounce, as investors sought safe-haven assets amidst ongoing geopolitical uncertainties.
Sandra Horsfield, an economist at Investec, noted: "The record gold prices have encouraged some speculative buying, even by households, as they look to tap into the boom." This trend highlights how macroeconomic factors are influencing consumer behaviour beyond traditional investment circles.
Mixed Performance Across Retail Categories
Despite the overall December increase, the retail landscape revealed stark contrasts. Non-food stores suffered a 0.9% decline, their worst performance since May of the previous year, with clothing and footwear sales dropping 0.7%. Conversely, supermarkets experienced a modest 0.2% month-on-month rise, benefiting from competitive pricing strategies during the festive season.
Jacqueline Windsor, head of retail at PwC UK, commented: "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, diverting spending from discretionary categories to essentials due to higher grocery price inflation."
Annual Growth and Lingering Challenges
The December figures contributed to a 1.3% rise in retail sales volumes for the entirety of 2025, representing the largest annual increase since 2021. However, this growth was insufficient to offset declines of 0.8% and 0.1% in October and November, respectively, resulting in a 0.3% drop for the crucial final quarter of the year.
ONS senior statistician Hannah Finselbach stated: "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."
Consumer Confidence and Future Outlook
Separate data from GfK's consumer confidence report, released on the same Friday, offered a glimmer of hope for continued recovery, showing a slight improvement in readings attributed to household resilience. Economists suggest that easing policy uncertainty, falling inflation, and anticipated interest rate cuts could further bolster consumer spending in 2026.
Elliott Jordan-Doak, senior UK economist at Pantheon, explained: "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."
The festive retail rebound, therefore, paints a complex picture of resilience in specific sectors like online jewellery, juxtaposed with ongoing struggles in traditional non-food retail, setting the stage for a cautiously optimistic year ahead.
