There is a lot of negative commentary on the December retail sales numbers, with the view that they were flat or disappointing. All of this originates from using seasonally adjusted, month-over-month figures. As we have noted many times before, this is a highly misleading and inaccurate way of assessing performance.

The reality, using year-over-year unadjusted numbers, is very different from the headlines. Total retail sales grew by 3.8 per cent, the best December rate since 2022 and broadly aligned with the long-run average. Core retail sales – which exclude gas, autos and foodservice – were robust, with a 4.3 per cent uplift in spending.

The numbers include inflation, which flatters the growth rate. However, even when this is stripped out, retail volumes for core sales are up by 1.4 per cent. This might not be spectacular, but it is certainly respectable.

While there are economic pressures on the consumer, most shoppers were determined to have a good festive season, and many opened their wallets to do so. That said, levels of credit used over the period were high – which suggests the pace of growth is not completely sustainable and may not be fully carried into 2026. Beneath the headlines, there are also a lot of coping behaviors – like trading down and shifting to value channels – swirling around as consumers try to maximize the bang they get for their buck.

On a sector basis, beauty retailers posted one of the best performances, with an 8.1 per cent lift in sales compared to last year. In some ways this is not surprising as beauty has been a stand-out category for most of 2025, but it underlines the popularity of things like skin care and fragrance for gifting, and the continued importance of self-indulgence and self-treating.

Apparel also had a solid month, with sales up 5.4 per cent and volumes remaining positive. There was more of a focus on dressier styles and layering in December. The volume uplifts helped growth, but so too does the fact that prices for more formal, style-forward items are higher than everyday casual items. Apparel also featured heavily on gift lists, partly because of its practicality.

Sales at food retailers rose by 1.8 per cent, which is a somewhat muted outcome given the heavy food focus of the holiday season. There is certainly some frugality in the mix here as consumers are buying more in value channels, switching branded products for cheaper own-brand alternatives, and generally being more conservative in their buying behavior. There was also slightly more dining-out activity this holiday, which put a small dent into food retailer spending.

The sector that performed less well was furniture and furnishings, where retail sales dropped by 3.7 per cent. This is not necessarily surprising as there was a lot of pull-forward spending earlier in the year as consumers tried to beat tariffs. But consumers were also deprioritizing spending on big-ticket items to free up budget for gifts and other holiday sundries that were important in the moment. We also saw some softness in seasonal decor, with more consumers trying to reuse decorations and accents from prior years rather than buy new ones.

On the channel front, non-store retail saw a mini-growth spurt with sales up 6.7 per cent. A lot of this was a consequence of online-discount events (Cyber Monday fell into December) and consumers using the channel for price comparison and convenience.

Now that the December numbers are in, it is also possible to look back at the whole of 2025. All in all, the year was solid enough with growth of around 3 per cent on a total basis. This is not the washout that some predicted, and it underlines the robustness of the US consumer. That said, the real story is in the underlying volumes, which came in below average and created some of the polarization we have seen among retailers.

The outlook for 2026 is very mixed, and we see many of the trends, such as low volumes, carrying over into the new year. The environment will remain one in which battling for market share remains critical.

• Neil Saunders is MD of GlobalData Retail.