Donations to Oxfam shops have dropped by more than 12 per cent for the second year running, while the charity reports an increase in sales of donated items.

The charity shop behemoth today reports a 15 per cent decline in public donations to its 700 retail stores, warning that – with people appearing to buy less in the Christmas sales – the situation has become critical.

Meanwhile, however, sales increased by 5 per cent year on year, with book sales rising by 7 per cent on the back of the launch of last year’s Bookfest literary festival.

Online shop sales were also very strong, bringing in £2.4m to the charity; up 70 per cent on 2008 figures.

“This is a crucial moment for us,” said Oxfam’s director of trading David McCulloch. “Over the last 18 months people have been buying less, replacing less and therefore donating less to Oxfam.

“[We are] quite sceptical of reports of a boom in the high street. Discretionary spending remains low, big sales are starting earlier and discounting harder, and we’re having to work harder than ever to maintain the high quality of donations,” he said.

2009 may not have seen the worst of it, the charity warns. Last week’s snow – and predicted severe weather to come – could further deter people from making the trip to the local charity shop to donate their unwanted goods.