LIVE MARKETS-British retail sales rebound in December, but outlook fragile

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UK RETAIL SALES REBOUND IN DECEMBER, BUT OUTLOOK FRAGILE

British shoppers were busy in December, with Friday data showing buoyant online sales behind an unexpected lift in retail sales, which came hot on the heels of UK finance minister Rachel Reeves's November budget.

"With no major shocks to consumers in the Autumn Budget, this prompted households to loosen the reins on spending in December giving retail sales a post-budget boost," said Jacqui Baker, head of retail at RSM UK in a note.

Over at Investec, economists point out a bounce in sales at online jewellers for precious metals after a softer November.

"We wonder whether higher retail demand in the UK and potentially elsewhere is one part of the surging gold price on global markets – but also a signal that has encouraged some speculative buying, even by households," they write.

The price of gold continues to push past record highs.

Investec says more interesting though is the scale of back revisions.

"Reported retail sales growth has been lifted substantially in each of the previous quarters, by 0.4 percentage points in Q1, 0.3 percentage points in Q2 and 0.6 percentage points in Q3, such that the year-on-year trend in retail spending now looks much brighter than before," they write, adding this could read through to GDP data soon.

A word of caution though, from other analysts.

"Looking ahead, sticky inflation could keep interest rates higher for longer, limiting disposable income and dragging down consumer spending," writes Phil Monkhouse, UK Country Manager at global financial services firm Ebury, flagging heightened volatility from renewed trade tensions and geopolitical uncertainty.

Capital Economics expects 2026 retail sales to remain soft.

"...we think that the combination of weak employment and slower wage growth will prevent a meaningful pick-up in consumer spending growth in 2026."

(Lucy Raitano)

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