Retail sales volumes in 2022 suffer biggest drop since 1989

Retail sales volumes in 2022 saw their largest drop since records began in 1989 with volumes falling in December for the ninth consecutive month.

The latest Retail Sales Index from the Office for National Statistics (ONS) showed that sales volumes fell by 1% in December following a drop of 0.5% in November. This meant that sales volumes were 1.7% below their pre-Covid February levels, which 2022 as a whole showed a fall of 3.4%, which is the biggest drop since records began in 1989.

The volume of non-food store sales was also down by 2.1% with continued feedback from retailers that consumers are cutting back on spending because of increased prices and affordability concerns.

That is reflected in the latest GfK Consumer Confidence Index which GfK said was “bumping along at hear-historic lows”, down three points in January at -45, down from -42 in December and -19 in January 2022.

Online sales volumes were also down, with internet sales representing 25.4% of all retail in December compared with 25.9% in November.

Results from the ONS’s public opinion and social trends bulletin covering December 7-18 found that six- out of 10 adults said they were planning on cutting back on the amount of money they spent on Christmas in 2022 compared with the previous year.

Commenting on the latest ONS figures, Helen Dickinson, chief executive of the British Retail Consortium, said: “Volumes fell for the ninth consecutive month as the cost of living squeeze caused consumers to rein in December spending. The high cost of household bills, particularly for energy, and rising food inflation, made for a difficult Christmas backdrop with falling consumer confidence. Nonetheless, increased discounting helped boost gift giving, with stronger sales growth for clothing and furniture.

“It is clear that inflation took its toll on the whole of 2022, with retail volumes falling 3.4% over the year, the biggest drop on record. Many of the cost pressures bearing down on retailers and their customers remain in 2023, with high energy costs, the war in Ukraine, and domestic labour shortages all taking their toll.

“However, BRC modelling suggests the situation will improve in the second half of the year.”

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