Consumers have remained resolutely confident over a year of significant political and economic upheaval but it has been a different story for retailers and experts fear there are rockier times ahead.
Retailers have done their best to absorb wholesale price increases and warned for months that they were at the limit of their capacity before inflation began to bite household finances as the year drew to a close.
Even Black Friday offers failed to spur a spending frenzy among squeezed consumers.
Britons have been suffering the knock-on effects of the Brexit-hit pound, which has made imports more expensive and lifted shelf prices across the country.
Uncertainty over Brexit and the wider economy, the first Bank of England base rate rise in over a decade and stretched affordability as rising living costs bite have all contributed to a mood of caution.
BRC chief executive Helen Dickinson said: “With current conditions likely to persist into next year, the Government needs to do all it can to support the UK’s consumers, not least by securing a fair Brexit for them in the forthcoming trade negotiations.”
Richard Hyman, who has analysed the retail sector for more than 30 years, raised doubt over consumer confidence, telling the Press Association: “If I read that consumer confidence is pretty good, I don’t believe it.
“Why would it be? It started off paper thin and it’s got progressively worse.
“There’s massive uncertainty. You’ve got inflation coming through, you’ve got earnings lagging to where they were years ago. This makes life difficult. Why would people be optimistic.
“It’s been a tough year. Uncertainty has been the main problem.”
Looking ahead to 2018, Mr Hyman said he predicted “more of the same”, adding: “How long is it going to be before we’re told what Brexit is going to look like?
“In retail it’s going to be a really defining year and I think we will see quite a lot of casualties.”
Lisa Hooker, consumer markets leader at PwC, noted the “continued resilience of consumer sentiment” but said that looking further ahead, UK consumers remained cautious about big ticket spending.
She said: “We predict that furniture and electronics will be one of the first casualties of consumers tightening their belts, although we won’t see the impact of this on the high street until the first quarter of 2018, which is traditionally the time of year that people think about big purchases for their homes.”
Joe Staton, head of market dynamics at GfK, whose consumer confidence index just marked almost two years without a lift into positive figures, said: “It has been a slipping and sliding year.
“We need to see several issues move on before the downward trend of the consumer mood changes. We need to have a better sense of how Brexit will pan out and also of how quickly and how far interest rates will rise.
“None of this will be resolved quickly, so there’s every likelihood that 2018 will take us lower.”
Source: Yahoo Finance UK