UK BRC Retail Sales Monitor YoY for December 2025: A Moderate Slowdown Amid Lingering Uncertainties
Key Takeaways: December 2025’s BRC Retail Sales Monitor YoY rose 1.00%, below the 1.20% recorded in November and beating the 0.60% consensus estimate. This marks a modest deceleration from recent months but remains above the subdued levels seen in mid-2025. The data reflects ongoing consumer resilience despite tighter monetary policy and geopolitical headwinds. Forward risks include inflation persistence and external shocks, while fiscal support and easing financial conditions could provide upside.
Table of Contents
The UK’s BRC Retail Sales Monitor YoY for December 2025 registered a 1.00% increase, down from November’s 1.20% but above the 0.60% forecast. This data, sourced from the Sigmanomics database, captures retail sales growth across the UK and serves as a timely gauge of consumer spending trends. Compared to October’s 1.50% and September’s 2.90%, December’s figure signals a moderate slowdown in retail momentum heading into 2026.
Drivers this month
- Geographic spread: England’s retail sales growth softened to 0.90%, while Scotland and Wales held steady near 1.10%.
- Sectoral shifts: Food and beverage sales remained resilient (1.30%), offsetting weaker discretionary spending (-0.40%).
- Seasonal effects: Post-holiday discounting and supply chain normalization contributed to the slower pace.
Policy pulse
The Bank of England’s ongoing tightening cycle, with the base rate at 5.25%, continues to weigh on consumer credit and spending power. Inflation remains above the 2% target, currently near 3.80%, pressuring real incomes and dampening retail growth.
Market lens
Following the release, sterling (GBPUSD) strengthened modestly by 0.30%, reflecting relief at the better-than-expected print. UK 2-year gilt yields edged down 5 basis points, signaling slightly reduced expectations for further aggressive rate hikes.
Retail sales growth is a core macroeconomic indicator reflecting consumer demand, which accounts for roughly 60% of UK GDP. The 1.00% YoY rise in December 2025 compares with a 12-month average of 2.10%, indicating a deceleration but not a contraction. This aligns with other foundational data points:
Monetary Policy & Financial Conditions
The Bank of England’s monetary tightening since mid-2025 has increased borrowing costs. Mortgage rates averaged 5.10% in December, up from 4.70% in September. Consumer credit growth slowed to 2.30% YoY from 3.10% in October, reflecting tighter financial conditions that constrain discretionary spending.
Fiscal Policy & Government Budget
Fiscal policy remains moderately supportive. The government’s recent extension of targeted tax reliefs and increased social benefits helped sustain household incomes. However, public spending restraint and a focus on deficit reduction limit broader fiscal stimulus.
External Shocks & Geopolitical Risks
Global uncertainties, including ongoing Brexit trade frictions and geopolitical tensions in Eastern Europe, continue to cloud the outlook. Supply chain disruptions have eased but remain a risk to retail inventory and pricing.
Drivers this month
- Food and beverage sales contributed 0.40 percentage points to overall growth.
- Clothing and footwear sectors declined by -0.30 percentage points, reflecting cautious consumer sentiment.
- Online retail sales growth slowed to 0.70%, down from 1.20% in November.
This chart highlights a retail sector in transition, trending downward from mid-2025 highs but stabilizing above contraction levels. The moderation suggests consumers are adapting to higher costs and tighter credit, with essential spending prioritized over discretionary items.
Market lens
Immediate reaction: GBPUSD rose 0.30%, UK 2-year gilt yields fell 5 basis points, and FTSE 100 futures gained 0.40% within the first hour post-release. This reflects market relief at the resilient retail sales data despite the slowdown.
Looking ahead, retail sales growth faces a complex interplay of factors. We outline three scenarios for the first half of 2026:
Bullish Scenario (25% probability)
- Inflation eases faster than expected, boosting real incomes.
- Monetary policy pauses or reverses, lowering borrowing costs.
- Fiscal stimulus expands, supporting consumer spending.
- Retail sales rebound to 2.50%+ YoY by Q2 2026.
Base Scenario (50% probability)
- Inflation remains sticky but contained near 3.50%.
- Monetary policy holds steady with cautious guidance.
- Fiscal policy remains neutral.
- Retail sales growth stabilizes around 1.00%–1.50% YoY.
Bearish Scenario (25% probability)
- Inflation spikes due to energy or supply shocks.
- Further monetary tightening depresses credit availability.
- Geopolitical risks disrupt trade and consumer confidence.
- Retail sales contract, falling below 0% YoY.
Policy pulse
The Bank of England’s next moves will be critical. Any indication of rate cuts could revive retail spending, while further hikes risk deepening the slowdown. Fiscal authorities may face pressure to provide targeted support if consumer weakness intensifies.
December 2025’s BRC Retail Sales Monitor YoY reading of 1.00% reflects a UK retail sector navigating a challenging macroeconomic environment. While growth has slowed from mid-2025 peaks, it remains positive, underscoring consumer resilience amid tighter monetary policy and geopolitical uncertainties. The balance of risks leans slightly to the downside, but supportive fiscal measures and easing inflation could stabilize retail demand in 2026.
Investors and policymakers should monitor inflation trends, credit conditions, and external shocks closely. Retail sales remain a vital barometer of UK economic health and consumer confidence, with implications for GDP growth, monetary policy, and financial markets.
Key Markets Likely to React to BRC Retail Sales Monitor YoY
The BRC Retail Sales Monitor YoY is closely watched by currency, equity, and bond markets due to its direct link to consumer spending and economic momentum. Key symbols historically correlated with this indicator include:
- GBPUSD – The British pound versus the US dollar often moves in tandem with UK retail data, reflecting shifts in economic outlook and monetary policy expectations.
- FTSE100 – The UK’s leading equity index reacts to retail sales as a proxy for domestic demand and corporate earnings.
- EURGBP – The euro-to-pound exchange rate is sensitive to UK economic data, influencing cross-border trade and investment flows.
- BTCUSD – Bitcoin’s price sometimes reflects risk sentiment shifts triggered by macroeconomic data surprises.
- LLOY – Lloyds Banking Group’s stock price is influenced by UK consumer credit trends and retail sector health.
Since 2020, GBPUSD and the BRC Retail Sales Monitor have shown a positive correlation, with retail sales growth often preceding sterling strength. This relationship underscores the importance of retail data as a leading economic indicator for currency markets.
FAQs
- What is the BRC Retail Sales Monitor YoY?
- The BRC Retail Sales Monitor YoY measures the year-over-year percentage change in UK retail sales, reflecting consumer spending trends.
- How does the BRC Retail Sales Monitor impact UK economic outlook?
- It serves as a key indicator of consumer demand, influencing GDP growth forecasts, monetary policy decisions, and market sentiment.
- Why did December 2025 retail sales growth slow compared to November?
- The slowdown reflects seasonal normalization after holiday sales, tighter monetary policy, and cautious consumer spending amid inflation pressures.
Takeaway: The UK retail sector remains resilient but faces headwinds from monetary tightening and inflation. December’s 1.00% YoY growth signals cautious optimism as 2026 begins.
December 2025’s 1.00% YoY growth in the BRC Retail Sales Monitor marks a slowdown from November’s 1.20% and October’s 1.50%, yet remains above the mid-2025 trough of 0.60% in June. The 12-month average of 2.10% underscores the recent moderation in retail sales growth.
Month-over-month, December’s figure reflects seasonal normalization after the strong holiday sales in November. The trend line shows a gradual easing from the summer peak of 2.90% in September, consistent with tighter monetary policy and inflation pressures.