Data published by the Office for National Statistics (ONS) showed that retail sales increased by 3.4% in January, offsetting the December drop (-3.3%, revised from -3.2%), and recording the largest increase since April 2021. Economists had expected growth of 1.5%. For the three-month period (through January), sales volumes fell by 0.2% when compared with the previous three months. It was the weakest drop since August 2023. Meanwhile, retail sales excluding fuel rose by 3.2% after falling by 3.5% in December (revised from -3.3%). Consensus estimates suggested an increase of 1.7%.
The data also showed that, in annual terms, retail sales rose by 0.7% in January after declining by 2.4% in December. This was the sharpest increase since March 2022. Economists had expected a 1.4% drop.
The ONS said sales volumes in all sub sectors except clothing stores increased over the month, with food stores such as supermarkets contributing most to the increase. Food stores sales volumes increased by 3.4% (compared to -3.1% in December), while non-food stores sales volumes increased by 3.0% after a 3.9% decrease in December. Some of the fall in December was because of consumers purchasing Christmas gifts earlier, during the November Black Friday discounts. Automotive fuel sales volumes rose by 5.4% in January, offsetting the December drop (-1.9%), helped by falling fuel costs. The data also showed the amount spent online, known as online spending values, fell by 4.1% m/m. The proportion of online sales was 24.8% compared to 26.8% in December.