Festive joy for retailers as sales growth is fastest in 9 years

Disappointing set of figures after many stores pinned their hopes on sparkling Christmas trading following a weak autumn (GETTY IMAGES)

Retailers enjoyed a "spectacular" Christmas, official data showed, with total sales growing at their fastest rate in years.

Retail sales rose by 2.6 per cent month on month in December, according to the Office for National Statistics, well ahead of City expectations of 0.4 per cent growth, as customers opened their wallets over the festive period.

David Tinsley of BNP Paribas described the figures as “spectacular and surprising” and said that deep discounting by stores drove a huge increase in sales volumes. “It’s a boom,” said Alan Clarke of Scotiabank.

Sales in the month were 5.3 per cent higher than in the Christmas month of 2012, representing the fastest annual growth since 2004.

The performance, which is decidedly stronger than the most recent survey from the British Retail Consortium suggested, will bolster hopes that the overall economy continued to grow strongly in the final quarter of 2013, following the 0.8 per cent GDP expansion recorded in the three months to September.

The retail sector accounts for only around 6 per cent of the economy, but is regarded as an important barometer of wider consumer sentiment.

The pound jumped sharply in response to the figures, rising around one cent to $1.644.

The figures confirmed that many people did the Christmas shopping online this year, with internet sales increasing by slightly under 12 per cent year on year.

Non-food stores sales were up 7 per cent year on year, a better performance than grocers, which saw sales rise by 5.3 per cent.

Ikea became one of the final few retailers to reveal strong post-Christmas trading figures today. The company put in extra effort to woo festive shoppers, selling 46,000 Christmas trees, and sales in the 12 days from December 26 were up 12 per cent on last year.

Gillian Drakeford, UK and Ireland Ikea manager, said: “We’ve seen the main areas of growth in living rooms, Children’s Ikea and bathrooms, where we have made recent investments.”

SSP Group, the company behind Upper Crust and Caffè Ritazza, took a step closer to a possible IPO after sales jumped 5 per cent to £1.83 billion.

New chief executive, Kate Swann, formerly of WH Smith, declined to rule out a float.