Retail sales across the UK saw a stronger-than-expected increase of 1.7% in January, according to figures released by the Office for National Statistics (ONS) today. This marks a recovery following a 0.6% decline in December.
Economists had predicted a more modest monthly rise of 0.3% in sales volumes, making the actual growth significantly higher than anticipated.
The January boost was largely driven by food sales, which experienced a notable 5.6% rise in sales volumes. This marked the largest monthly increase for food stores since March 2020, suggesting more consumers opted to dine in after the festive period.
However, sales in non-food sectors, including clothing and household goods, showed a dip of 1.3% over the same period, reflecting ongoing challenges in consumer confidence.
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Despite this, overall retail performance was a positive sign for the sector, with online sales showing a slight recovery, up 2.4% in January compared to the previous month.
The ONS data also highlighted a shift in consumer spending habits, as the proportion of sales made online fell to 25.7% from 26.9% in December 2024, signalling a return to physical store shopping.
For the wider retail sector, the 1.7% rise in sales volumes in January is a welcome sign after a series of declines in the final months of 2024.
On the latest figures, Alvarez & Marsal European and retail consumer lead Erin Brookes said: “After a disappointing December, January sales provided a much-needed boost to the retail sector as shoppers bought into January sales and offers, with food stores and non-store retailing particularly able to drive spend this way.
“However, the sector remains in a delicate position as economic pressures persist. From April, retailers will find themselves facing tightening margins, as employer National Insurance and Living Wage rises take effect, creating the worst conditions since the height of the inflation spiral. To offset these cost pressures and inflationary headwinds, many retailers will be forced to consider job cuts or price increases.
“Combined with ongoing consumer concerns about the macro-economic picture and their household finances, shoppers are expected to remain focused on value and finding the best deals.”
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