Friday 06 January 2017 6:00 am

Christmas spending splurge fails to push high street sales into positive territory

High street shops ended a disappointing year with a dismal performance during the festive season, failing to land positive sales despite bumper spending in the week before Christmas.

Christmas fell on a Sunday this year, meaning shoppers had an extra day to spend, but like-for-like sales growth on the high street still came in at minus 0.1 per cent year-on-year in December – the fourth December of losses in a row.

In 2015, sales growth was minus 5.3 per cent, according to figures from accountants BDO. That was the worst performance since the year of the financial crisis, showing just how gloomy trading on the high street has become.

Shoppers were out in their droves buying presents before Christmas Day itself, and the extra day of shopping contributed to a year-on-year sales growth of 11.7 per cent in that week.

Sophie Michael, head of retail and wholesale at BDO, said:

With such a weak base for December 2015, any further decline can only be seen as a poor performance for retailers.

She said the figures showed "the magnitude of the challenge that lies ahead" for retailers when consumers are hit by rising inflation this year.

Next has already warned that its prices could rise by five per cent this year due to the fall in the value of pound, ultimately hitting sales by 0.5 per cent as inflation squeezes incomes. This announcement from Next triggered a sell-off of retail shares, including the shares of fellow retailers Marks and Spencer and Debenhams.

Inflation is expected to hit three per cent this year, and, according to recent figures from the British Retail Consortium, clothing and furniture prices were already starting to rise in December. Food prices, however, have been kept low by the intense competition in the grocery sector, with all the supermarkets competing to match the prices of German discounters Aldi and Lidl.