Retail sales volumes fell by 3.7% last month compared to November, according to figures issued this morning by the Office for National Statistics (ONS).
This was much worse than the 0.6% decline forecast in a Reuters poll of economists.
Spending fell in December as shoppers kept away from high streets and shopping centres following the discovery of the Omicron variant of Covid, and after a rise in November as some people finished their Christmas shopping early.
This disappointing update on the fortunes of the retail sector follows other gloomy news for the British economy.
It emerged earlier this week that UK inflation has hit a three-decade high, putting more pressure on the Bank of England to raise interest rates again. The consumer prices index jumped by 5.4% in the 12 months to December, according to figures from the ONS.
Morning market update
The UK's top share index, got off to a disappointing start today following on from a poor Thursday in US markets.
Just after 8am, the FTSE 100 had dropped more than 60 points at 7,518.28.
The leading index had finished marginally in the red yesterday, despite a bright opening - closing down 4.65 points at 7,585.01.
Weakness in the energy sector and falls among commodity giants were reported to have weighed on the FTSE 100.
However, things were even worse on the other side of the Atlantic - all three major stock benchmarks closed sharply lower on Thursday.
The worst sufferer was the Nasdaq Composite Index, which fell by 186.23 points, or 1.3%, to 14,154.02.
The Dow Jones Industrial Average was down 313 points, or 0.89%, to 34,715.39, and the S&P 500 fell 50.03 points, or 1.1%, to 4,482.73.
Companies reporting today
- Interims: The Works.co.uk
- Trading update: Close Brothers.
- Other updates: HMRC house sales figures, speech by Bank of England interest-rate setter Catherine Mann on monetary policy.