UK shoppers splashed out an extra £500m on groceries in last-minute Christmas rush

Despite gloomy economic predictions for year ahead supermarket receipts rose at fastest rate since June 2014 - but inflationary pressures are building

Sales were buoyant, but price rises are beginning to bite, data shows (Reuters)

British shoppers made a last-minute dash to the tills before Christmas, spending almost half a billion pounds more on groceries than they did in the same period last year, new industry figures show.

Despite gloomy economic predictions for the year ahead, supermarket sales rose at their fastest rate since June 2014 in the fourth quarter of 2016. Receipts were up 1.8 per cent during the final 12 weeks of the year, figures from research firm Kantar Worldpanel showed. More than half of the 30,000 households surveyed bought groceries on December 23, making it the busiest shopping day of the year.

A separate survey by the British Retail Consortium also released on Tuesday reported a “strong finish to a roller-coaster year”, after finding overall shop sales in the run-up to Christmas increased 1 per cent on 2015, thanks to a particularly resilient final week. The numbers were boosted by comparisons with a weak festive period in 2015 and the fact that Christmas Eve was on a Saturday, the BRC said.

“Retailers were helped by the timing of Christmas, which fell on a Sunday, giving shoppers the chance to use the weekend for a final dash to the shops delivering a last-minute boost to sales,” said Paul Martin, UK head of retail at KPMG, which helps to compile the BRC report.

The prolonged period of low grocery prices that shoppers have enjoyed may be coming to an end however. Food prices in the last twelve weeks of 2016 increased by 0.2 per cent from the previous quarter - the first rise for 28 months, with more hikes predicted in 2017 as the weak pound raises import costs.

Barclaycard, which also released consumer spending data on Tuesday, found an increased spend of 4 per cent in December was driven partly by rising prices, rather than additional confidence.

Petrol spend was up 10 per cent due to higher oil prices and sterling’s collapse. Shoppers are spending more on essentials and less on luxury items, Barclaycard’s report found, noting that confidence in the UK economy fell 12 percentage points, back to levels last seen before the Brexit vote.

“The shift in spend from discretionary items to essentials reflects a growing sense of caution as the arrival of 2017 brings a new wave of economic uncertainty following the Brexit vote,” Barclaycard said.