British retailers reported a weak run-up to the Christmas holidays with sales falling again and businesses worrying about higher costs in 2025, the Confederation of British Industry said on Friday.

The CBI’s monthly retail sales headline balance improved only marginally to -15 in December from -18 in November. It had also contracted in October.

“Retailers have endured a gloomy festive period,” CBI Principal Economist Martin Sartorius said. “Looking ahead, retailers expect sales to fall again in January, while wholesalers and motor traders are braced for sharper sales declines.”

The CBI’s measure of expected sales for January picked up to -11 from -29 but remained in negative territory.

Policies in the new government’s first budget announced on October 30 will push up employment costs next year. Employers will have to pay higher social security contributions from April, when Britain’s minimum wage is due to rise by almost 7%.

Official retail data for November published earlier on Friday showed only a small pick-up in sales growth after a sharp fall in October in the run-up to the budget.

Sartorius said the government should speed up an overhaul of the business rates tax charged on most non-domestic properties and broader reforms to boost growth in the economy.

The CBI survey was based on responses from 72 retail chains and 92 wholesalers between November 25 and December 12.