SHOPPERS will feel the pinch in the New Year, with price hikes putting a strain on disposable incomes.

Increasing inflation and council-tax rises are likely to put a strain on how much money consumers have to spend, said the director of the Scottish Retail Consortium.

David Lonsdale also predicted the country’s shops would face “formidable challenges” in the coming year and called for a “more coherent” approach to policy-making.

The warnings come after reports that Boxing Day sales were 6.7 per cent down on last year’s figures, making it a disappointing end to a challenging year for many struggling UK retailers.

In his New Year public message, Mr Lonsdale said: “In many respects our economy lives or dies by what happens to consumer spending.

“That’s why policy-makers should be concerned about the formidable challenges for Scottish retail in the year ahead. Rising inflation and council taxes are likely to put a strain on disposable incomes.

“However, households will be relieved by the Scottish Government’s decision not to increase income-tax rates, an area on which the Scottish Retail Consortium and Government are firmly at one.

“Retailers themselves continue to grapple with a hotchpotch of Government-imposed cost pressures.

“This is set to continue into early 2017 when employers of scale start forking out for the apprenticeship levy.

“This reinforces the need for government at every level to work more effectively with the retail industry to help it keep down the cost of living for consumers and to help it thrive and prosper.

“A more coherent approach towards policy-making in the year ahead is certainly required.

“This will become all the more important with Scotland’s economic performance now determining to a significant extent the levels of devolved public sector revenue.

“That will only become more important, especially with half of VAT receipts soon to be assigned to the Holyrood Parliament.

“Our MSPs will have an even greater direct stake in supporting a flourishing retail industry.”

He said he hoped 2017 will bring more clarity on the implications of Brexit, particularly for tariffs on imported goods, and that the culmination of the Barclay review of business rates will result in a rate reduction to help boost retailers’ confidence and help revitalise the country’s high streets.