Retail Forecast 2023-2024

The forecast is dated 5 December 2022 but we have amended the webpage regularly since then, without changing the central forecast. An assessment of the way specific UK retail trade sectors changed during 2022 will be found at the end of this report. 

In August 2021 we produced a forecast for 2022-23 based on our expectations of an expanding UK economy and increasing retail sales, following the ending of most significant covid regulations and the expected resumption of normal patterns of life and work.


A recession was forecast for the period end-2022 to end-2023, but (as we stated in the original version of this forecast) 'may not actually occur' and did not occur! The economy has been very sluggish, but ONS data shows some limited growth is still occuring. Last year, the Office for Budget Responsibility (OBR) expected that GDP would decline in 2023 by -1.4% from an average of +4.2% in 2022. By June 2023 the recession had still not occurred, although the rapid increase in bank rate (and mortgage rates) may bring this about by the Autumn. The OBR reckoned that the 2023 downturn would actually be around -0.2% (which is well within the range of forecasting error).

The situation now (early July 2023) is that although we have avoided recession so far, recession may occur from Sept. 2023 for about 12 months in order to bring inflation back to more manageable levels of, say, 4%-6%. It is all very discouraging. Our forecast of retail spending in real terms faling by -3.3% is unchanged from January 2023.

A World In A Mess

Anxieties about high inflation in the UK, the rising costs of gas and electricity, increasing mortgage rates, daily news from the horrors of the Ukraine war and concern about the impaired state of the UK economy  have combined with badly-handled political exits by Boris Johnson, followed even more swiftly by Liz Truss, to generate a sense that the world is out of control. Sunak, as PM, seems to have calmed down the financial markets, improved our relationship with the EU and created an atmosphere of stability. However strikes and direct action by political extremists continue to depress sentiment. 

Reduced Retail Spending

Shoppers have cut back on their spending in shops. Since April 2022, consumers have spent less each month on retail than the same month last year. Our estimate for the whole of 2022 was that the volume of retail sales (ie allowing for inflation) would fall by -3.3% against 2021 (the ONS figure for 2022 was -3.4%, which was as near as dammit to our own) and will continue to fall in 2023. Compared to last year, volume sales in 2023 have continued to fall as a result of a combination of inflation, rising energy costs and consumer pessimism about the near-future. In the first Quarter of 2023, volume sales fell by -4.2%, but improved in summer so that by May the volume fall against 2022) was only by -1.7%. This improvement (perhaps 'less bad' might capture the trends UK retail sales better) won't last however, because the threat of recession now seems more imminent.

Consumer Confidence is Shot

The GfK Consumer Confidence Index was showing the worst results ever between May 2022 and February 2023. In May 2022 Consumer Confidence was -40 and as low as -49 by September ’22. Spring 2023 brought an improvement. By May 2023 it was -24 (compared to -36 in March 2023).  As recently as 2015, the GfK Index for consumer confidence usually averaged somewhere around zero. 

We originally thought that inflation in the UK would fall rapidly in the second half of 2023, as the inflationary thrust of the post-Covid world and the energy shortage created by the Russian invasion of Ukraine diminsihed and the high prices rises of 2022 dropped out of the statistics, but we were wrong.    

Centre for Retail Research: Our Forecast

  • We estimated that for 2022 as a whole retail spending in volume terms (ie taking account of inflation) fell by -3.3% (ONS [Jan 2023] figure shows -3.4%).
  • We expect retail sales volumes to fall further in 2023, this time by -3.0%.
  • In 2024, there should be some improvement with the volume of retail sales increasing by +1.3%.

The rate of inflation is very difficult to predict.  Inflation for the whole of 2022 may be an average of perhaps 12%. We expected prices to rise in the first half of 2023 (2023,H1), but to moderate somewhat in the second half of 2023, which is now occurring - but very slowly. 

Forecasts and Outcomes for volume sales 2018-2024 (in real terms, calculated to 2019 levels as base 100) 

-    Outcome 2018: retail sales growth                +2.5%  (base 97.2)

-    Outcome 2019: retail sales growth                +2.9%  (base 100.0)

-    Outcome 2020: retail sales growth                +0.7%  (base 100.7)

-    Outcome 2021: retail sales growth                 +4.3%  (base 105.1)

-    Outcome 2022: retail sales growth                 -3.3%  (base 101.6)

-    Forecast  2023: retail sales growth                -3.0%    (base 98.6)

-    Forecast 2024: retail sales growth                 +1.3%    (base 99.9)

       The figures above are in real terms, adjusted for inflation. The use of 2019 figures as the base for these figures shows that by the end of 2024, retail sales should by 99.9  - still slightly below the totals achieved in 2019. 

Table 1

Actual and Forecast UK Retail Sales Growth (all retail: online and physical stores) in real terms, adjusted for inflation


Food Sales *

Non-food sales * 

Online Sales

Online Share































These averages represent changes in volume sales.

*Both online and offline (physical stores)         



Most countries, particularly those in Europe, are likely to be affected by a recession in the last quarter of 2022 and in 2023. This is because of an economic slowdown resulting mainly from supply-side shortages, energy price inflation (as well as possible shortages) and the knock-on effect of the costs and difficulties caused by the covid pandemic. Countries like the U.S. and Canada with their own plentiful supplies of energy are less affected.

Stock market prices have fallen by -14.4% (S&P 500) in the U.S. since December 2021, -13.4% in China (Shanghai Comp), -20.5% in Hong Kong, -18.3% in Taiwan and -7.0% in South Korea, although Western European and Japan’s stock markets have regained most of their losses. Countries like Brazil, India, Indonesia and Egypt have witnessed growth in share prices since last December.   

China, one the most important global drivers of economic growth, has disrupted international supply chains (components, raw materials and finished goods) by its pursuit of zero covid. Its policy now seems to have changed (early December 2022) so the disruption of supplies and the massive increase in transport costs may be ending.

One of the big questions affecting how soon the recession can be ended is the future of the Ukraine war. It is quite possible that the war will go on for another two years.


Inflation in 2023

Inflation has been the big story in 2022 and has led to large-scale strikes of a kind we have not seen since the 1980s. Overall UK inflation for 2022 is running at +11.1% (Economist [2022] 3 December) although the ONS’ CPI figure is 9.6%. Some of the biggest sources of higher inflation are:

Food & Beverages CPI increases                                                                        +16.4%

Housing/services (maintenance, gas, electricity)                             +11.7%

Furniture & Household Goods                                                                             +10.6%

Transport                                                                                                                             + 9.3%

The main factor affecting prices is the war in the Ukraine, influencing both supplies of certain foods and supplies of energy. In any event, energy prices are likely to weaken in the summer of 2023 as demand falls and as energy supplies rise because of new investment in energy and facilities to handle new supplies including Liquified Natural Gas (LNG). Moreover, the inflationary effect of rising energy prices will be much reduced because the increased cost of electricity and gas will already have been included in the 2022 price indexes, so should have little further impact on inflation in 2023, apart from energy price reductions.

The Next Twelve Months

We can expect wages to continue to grow, prompted by labour shortages as well as the increase in inflation.

To combat both these problems it is important that the government makes it easier to bring workers into the UK – including farm labourers – and that migrants/asylum-seekers should be allowed to work rather than subsisting on handouts until their cases are heard. The second need is to ramp-up training course for skills to enable people to switch jobs and overcome the country’s significant labour shortages.

Government Economic Policy

After all the spending on coronavirus, the most-recent figure shows that by Q.1 of 2022 national debt was 99.6% of GDP. Austerity does not necessarily work. For example, as a result of the last dose of Austerity (2010-2915), the UK national debt (percentage of GDP) did not fall but rose from 74.8% to 86.9%.  No other country is attempting to reduce its national debt as fast as the UK government. For example, France’s debt is 114.4% of its GDP and we can be sure that the French government will not launch an austerity programme in order to reduce the debt any time soon.

The best way to create additional tax revenue to reduce the national debt as a percentage of GDP is by a policy of economic growth, not economic decline. When I was born, the Debt to GDP ratio was as high as 221%: a war was being fought. By 1962, the debt ratio was down to 98%, because of the rapid growth in those post-war years, not by austerity.



Food Sales in 2022

Food sales, which were buoyant in 2020 and 2021, fell back at the start of 2022.  From April food sales fell below the levels of 2019 by an average of -3.3% for the year as a whole. Sales were about £9.4bn down on 2021. 

Food specialists had experienced a poor epidemic (many of them closed for long periods, others were affected by a general reluctance by customers to enter smaller retail premises). In 2022, they had a big boost to sales. In January 2022 alone, average sales rose by as much as 35.5% amongst food specialists (most of whom were probably closed the year before). For the year as a whole average sales volumes rose by 7.5%. However by the end of the year these gains were not being maintained and monthly sales were running at 2019 levels.    

Alcohol, Other Beverages and Tobacco. 2022 has been a disaster for off-licences and tobacconists apart from January. There were significant falls in sales in every month. Compared to 2021, July saw a fall in sales of -41.3% and -35.6% in August. 


For non-food in general sales were significantly down in the second half of the year - 1.4% below 2019 figures.  The first quarter of 2022 however showed a continuation of the growth achieved by the sector in the latter part of 2021: volume sales rose by +28.2%. Overall however, average nonfood retail sales volumes grew by +2.2% in 2022 compared with the previous year. 

Textiles, Clothing & Footwear. Sales were well down on 2019, but were less bad that 2020 and 2021. There was an astonishing first quarter, when volume sales rose +73.3% over 2021 (because shops were now open). The rest of the year was more anaemic with volume sales after June 2022 being an average of 5% below 2019 levels. However 2022 as a whole showed a volume sales increase of +13.5% against 2021, though the overall outcome for the year was still lower than 2019 levels. 

Household Goods. 2021 had been a good year for household goods as many months at home for shoppers stimulated spending to improve the domestic environment. In 2022, however, January was good, but otherwise sales were weak (and sometimes significantly weak, -25.5% down in May compared to May 2021).  For the year as a whole volume sales were -11.3% down on 2021. 

Cosmetics & Toiletries. Boomtime in this sector, with overall sales volumes rising +15.9% over 2021, and 2.3% above 2019 figures. Growth in January 2022 was +69.3% over the same month in the previous year and even +19.2% in October. What can have happened? Have people been going out more? Or even turning up for a day's work?

Sports goods and Games. The first quarter of 2022 was very good with increased volume sales of 24%-plus. Since then monthly sales have fluctuated and in the second half-year the gains of 2021 were not maintained. The increase in volume sales of sports goods and games for the twelve months of 2022 was only +0.3%.

Watches, Jewellery. The first quarter was good with volumes up +68.8% compared to 2021, but after April sales weakened considerably. For the year as a whole volume sales rose by +3.0%.

Flowers, Seeds, Petfoods. Another mixed picture. A great January (with a +43.2% boost in sales) but sales tailed off after March. For the year as a whole volume sales rose 3.0%. 

Online Sales. E-commerce sales by both pure-play online retailers and orthodox retailers have gone into reverse since the pandemic restrictions ended. Online sales in 2021 rose by +60.7%, but in 2022 online sales volumes slipped by as much as -12.0% and we expect a decline to occur in 2023 as well.  


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