- Total sales volumes increased by 3.4 per cent in January, according to the ONS
- Food outlets such as supermarkets contributed the most to volume growth
Retail purchases rebounded last month following a significant plunge in December, raising hopes of a quick end to the UK’s economic recession.
Total sales volumes increased by 3.4 per cent in January, according to the Office for National Statistics, more than double economists’ forecasts of 1.5 per cent growth.
It marks an improvement on the 3.3 per cent slump the previous month after many Britons took advantage of Black Friday to buy their Christmas presents earlier than usual.
Bumper growth: Total sales volumes increased by 3.4 per cent in January, according to the Office for National Statistics, more than double economists’ forecasts of 1.5 per cent growth
The January reading was the biggest monthly rise since April 2021, when loosening Covid-related restrictions enabled non-essential retailers and hospitality venues to start trading again.
Volumes returned to November 2023 levels on the back of strong performances across all retail sectors, except for clothing and footwear stores.
Food outlets such as supermarkets contributed the most to growth, recovering from a record decline in December to expand by 3.4 per cent.
Non-food shop volumes also improved significantly, with many department stores benefiting from the January sales and hardware shops bolstering household goods sales.
At the same time, automotive fuel purchases jumped by 5.4 per cent as lower fuel prices encouraged motorists to fill up more often.
Jacqui Baker, head of retail at RSM UK, said the result ‘provides a glimmer of hope for retailers’ given that ‘January is typically a lacklustre month’.
She added: ‘After a difficult ‘Golden Quarter,’ the big uptick will feel like a win, particularly when retailers are competing for spending as consumers look to chase away the January blues by booking holidays.’
The ONS’s latest monthly retail sales figures come a day after it revealed the UK slipped into recession at the end of last year amid continued household cost-of-living pressures and subdued business investment.
Gross domestic product contracted by 0.3 per cent in the final three months of 2023, following a 0.1 per cent decrease in the prior quarter.
However, many analysts are optimistic that the economy and Britain’s retailers will have a better 2024 due to falling inflation and expectations that the Bank of England will soon cut interest rates.
Real wages are also increasing, including by 1.9 per cent during the fourth quarter of 2023 compared with the same period the previous year.
Jon Boland, UK general manager of data firm Clover, said: ‘There are reasons to be positive over the outlook for the UK retail sector.
‘Consumer confidence is rising, wages are growing, the cost of borrowing is set to drop later this year, and inflation is predicted to reduce further soon – all these factors could feed into a spending recovery over the course of 2024.’
