Published by Global Banking & Finance Review®
Posted on January 8, 2026
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleUK retailers report mixed Christmas sales with strong food sales but weak clothing demand, amid concerns for 2026 economic outlook.
By James Davey, Paul Sandle and Sarah Young
LONDON, Jan 8 (Reuters) - Britons prioritised festive food but thought twice about spending on clothing and gifts over Christmas, trading updates from Tesco, Marks & Spencer and Primark showed on Thursday.
December's solid food sales offered some relief for major retailers, but lingering caution and stubborn inflation cloud the outlook for 2026.
Tesco, Britain's biggest food retailer, reported a 3.2% rise in underlying UK sales for the six-week festive period, calling it a "strong" Christmas. That was below summer growth of 4.6% and slightly under analyst forecasts. Its shares fell 5%.
'COUNTING EVERY PENNY'
Marks & Spencer's underlying food sales jumped 5.6% in the Christmas quarter, but clothing, home and beauty dropped 2.9%, hit by weak demand and the fallout from a cyber hack last year.
That dovetailed with Primark owner Associated British Foods, which said Britain's clothing market was "difficult" over Christmas. Its shares slumped 11% after it also warned of falling sales in continental Europe.
Greggs, Britain's biggest fast-food chain, flagged subdued consumer confidence and guided to flat profit this year.
Tesco CEO Ken Murphy said consumer confidence was mixed, with some shoppers "counting every penny".
"I think we've seen over Christmas that, despite comments to the contrary, people enjoyed Christmas ... they traded up," he told reporters.
"I can't legislate for what 2026 holds for anybody."
Consumer confidence remains fragile as unemployment rises. Official data last month showed Britain's jobless rate at its highest since early 2021.
On Tuesday, fashion retailer Next reported better-than-expected Christmas sales but warned growth would slow in 2026. CEO Simon Wolfson said he feared employment pressures would weigh on spending as the year progresses.
(Reporting by James Davey, Paul Sandle and Yadarisa Shabong. Writing by Sarah Young and Mark Potter)
Consumer confidence is a measure of how optimistic or pessimistic consumers are regarding their expected financial situation and the overall economy. It influences spending and saving behaviors.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
The UK economy refers to the economic system of the United Kingdom, which includes various sectors such as services, manufacturing, and agriculture, influencing overall growth and stability.
Holiday spending trends indicate how consumers allocate their budgets during festive seasons, often prioritizing certain categories like food and gifts, which can vary year to year.
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