Spending in all-important festive shopping period grew 2.1% y-o-y, MasterCard reports

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MasterCard SpendingPulse data today revealed that UK retail sales ended the year on a healthy note as spending continued to grow 2.1% in the critical nine weeks to Christmas, versus 2.2% for the full year.

The need for retailers to discount, consumers’ preference to trade down a brand or pricing tier, and price deflation from falling fuel costs gave a significant headwind to sales volume growth. However, when price-adjusted, the growth figure was a strong 4.4% across November and December, according to MasterCard SpendingPulse, which looks at retail sales across all card and cash payments.

The post-Christmas sales were even stronger with year on year growth of 3.1%.

For the first year ever, Black Friday was the single biggest shopping day of the year, confirming its prominence in the UK shopping calendar, but also a reflection of the extent retailers chose to discount prices to pull in sales.

Mark Barnett, president of MasterCard UK & Ireland, said: “Three factors significantly influenced retail spending in 2015: deflation, discounting and ‘downshifting’ – when consumers trade down a pricing tier. All things considered, 2015’s growth figures were very robust.  The last two months of the year gave us a window into the health of the British economy and consumers’ willingness to spend.”

The poorest performance across the festive season came from clothing sales. The unseasonably warm temperatures hindered the sector, which saw weak year-on-year growth at just 0.4% in December, and 0.8% for the two-month period from November.

In line with trends, e-commerce was the big winner, with 14% year-on-year growth in December, and 17.6% for the last two months of the year. Again the poor wet weather reduced footfall on the high streets, to the benefit of the online channel.