For the first time in ten years, pre-Christmas retail sales were no higher than a year earlier, reveals the latest survey from the Confederation of British Industry.
The results raise fears that the consumer spending that is sustaining the UK economy is faltering. If there are knock-on effects for employment, the housing market could suffer as overstretched borrowers face high repayments. An interest rate rise could make the situation worse.
December's CBI survey was also the first for nearly three years in which more retailers said sales were down than said they were up.
The CBI urges caution in interpreting the results since the monthly survey stops at 18 December , so does not allow for the possibility of a late surge in sales in the run up to Christmas.
But, in the two weeks covered, the survey shows year-on-year sales were down for 37% of firms, and up for just 34%.
The minus 3% balance compares with plus 21% in November and 25% in October. It is the first negative balance since January 1999 and the first negative balance for December since 1992 - raising fears that.
The three month moving average, which smooths out month-to-month fluctuations, shows sales growing but at a slower rate than in last month's survey. The balance of plus 14% compares to plus 22% in November.
Ian McCafferty, CBI chief economic adviser, says: “Retailers will be very concerned by these figures. We will need to wait for the full picture but, without a last-minute surge in spending, this will have been a very disappointing Christmas. We must hope that consumers are simply deferring purchases until the January sales.
“If the mood of consumers is still low into the New Year, then the outlook for the UK economy is seriously worrying.”