U.K. Consumers Splurged in December Despite Spread of Omicron

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U.K. retail sales jumped in December as consumers splashed out on Christmas items including clothes and jewelry, defying a surge in coronavirus infections.

Total sales grew 4.6% last month compared with December 2019, the British Retail Consortium said Tuesday. A separate report from Barclaycard showed consumer spending grew 12.2% in last month compared to two years before, driven by sales at supermarkets and fuel stations.

The reports indicate the economy may be weathering the omicron variant of the virus better than during the early stages of the pandemic, when the government forced most bars, restaurants and retailers to close. Separate surveys have indicated businesses are optimistic about the next year even though the government has asked people to limit contacts.

“Retailers did well to weather the challenging trade conditions,” Helen Dickinson, chief executive officer of the BRC, said in a report Tuesday. “Many people chose to shop online rather than travel to nearby high streets.”

Britain’s retailers held up better last month than those in Europe’s other leading economies, with footfall declining less sharply than in Germany, France and Italy. For the year as a whole, retail sales were up 6.6% from 2019 and 9.9% from 2020, the BRC said.

The reports also raised some red flags about the strength of U.K. consumers.

When it came to non-essential spending, Britons were more cautious than in November, according to Barclaycard, which sees about half of all credit and debit purchases in the nation. It said attributed that to people shopping earlier than usual because of issues finding goods in stores, concerns about the omicron variant and about half of consumers expecting inflation to eat into their budgets.

The hospitality sector took a particular hit, with restaurant spending down 14.1% last month, steeper than the 3.5% decline reported in November. New overseas travel restrictions and testing requirements also meant travel agents and airlines saw sharper contractions than in the month before. 

“More Brits were either isolating or choosing to stay at home due to the new variant, which hampered face-to-face retailers as well as hospitality and leisure outlets,” Jose Carvalho, head of consumer products at Barclaycard, said in a report. “There were some bright spots. Spending on essential items grew strongly as shoppers filled their trolleys with food and drink and celebrated.”

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