A subdued Christmas for retailers as consumers tighten their belts
Rajeev Shaunak December 19th 2025
Rajeev Shaunak, head of consumer at MHA, comments on today’s ONS retail statistics
Retail sales remained flat this November, after a weak October, indicating that the much-anticipated Black Friday week rush failed to materialise for retailers.
As the festive season approaches, many on the High Street will be hoping for a further spending boom that seems increasingly unlikely. We should learn more after the details of Saturday’s footfall emerges given it is the busiest shopping day of the year.
Despite the early present of inflation falling more than expected earlier this week and an interest rate cut yesterday, evidence suggests households are tightening their belts ever tighter. With inflation still well above the government’s 2% target, many consumers are unlikely to splash out on expensive festive treats and gifts, making for a subdued Yuletide for retailers.
With inflation still well above the government’s 2% target, many consumers are unlikely to splash out on expensive festive treats and gifts, making for a subdued Yuletide for retailers.
Consumers continue to remain under pressure from "fiscal drag", as the freezing of income tax thresholds for the past five years means more people are pulled into higher tax brackets. At the same time even as pay packets edge up, inflation continues to eat away at disposable income, leaving less to spend on Christmas luxuries.
In the food sector, it may look as though tills are jingling, with sales values on the rise. However, this is largely due to inflation, rather than increased demand. Many shoppers are being forced to trim their Christmas shopping lists, putting fewer expensive festive goodies (M&S Beef Wellington aside) in their trolleys as they try to stretch their budgets.
Non-food retailers face an even more volatile environment. While certain categories like technology have seen temporary spikes due to new product releases, clothing and department stores have struggled with inconsistent demand. For example, clothing sales peaked during the summer months but dropped sharply in the autumn as consumers prioritised "needs" over "wants."
"In non-food, the struggle is not just about price, but about relevance; with discretionary income shrinking, any purchase that isn't seen as essential is being deferred or cancelled entirely. This could leave retailers with excess stock that may trigger pre and post Christmas sales as they try to offload stock at the expense of margin."
