The KPMG/Ipsos Retail Think Tank has produced a report which predicts retail sales will grow by 2% at the most next year.
David McCorquodale, head of retail at KPMG, said: “There are multiple factors which could knock sales off course, including concern around the general election and an interest rate rise.
“There is undoubtedly growth coming through online sales, but this is a double-edged sword.
“Online sales have a higher cost to serve, putting even more pressure on retailers’ margins.”
The risk of Eurozone break up and political pressure for the UK to leave the EU could also being choppy waters in the form of unstable exchange rates.
Price deflation in grocery will continue said the think tank, with Tesco expected to launch a major new price campaign in the new year.