Retail sales volumes recorded their strongest monthly rise since May 2024, climbing 1.8 per cent in January as shoppers returned to spending after a subdued festive period, according to the Office for National Statistics (ONS).
The increase, which followed a 0.4 per cent rise in December and far exceeded forecasts of a 0.2 per cent gain, was driven by a surge in non-food categories, particularly other non-food stores, where volumes jumped 5.3 per cent. Non-store retailing rose 3.4 per cent, while household goods increased 3.2 per cent.
Commercial art galleries were highlighted as a standout performer, while soaring gold and silver prices prompted jewellers to report unprecedented demand.
Discount-driven boost
Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, said retailers benefited from consumers seeking value after Christmas.
“Retail sales jumped in January as consumers took advantage of discounts to beat the January blues,” she said. “As consumers set their new year’s resolutions for the year ahead, health and beauty came under greater focus, with sports supplements retailers seeing a boost.”
She added that poor weather helped accelerate the shift online.
“The wet and cold weather kept shoppers away from the high street, with many turning to online to find the best deals in the comfort of their own homes. Online sales are also being fuelled by the power of social media… making the purchase of these products incredibly easy in the click of a button.”
Baker said the figures would provide welcome relief after a challenging festive trading period, but warned sustaining momentum would be key.
“After a tough Golden Quarter, the latest uptick in retail sales is exactly what the sector needs, the difficulty now is maintaining solid sales growth,” she said.
Encouraging sign for the wider economy
Thomas Pugh, chief economist at RSM UK, said the data suggests improving economic conditions are beginning to feed through into consumer spending.
“The huge 2 per cent month-on-month increase in retail sales volumes excluding fuel in January suggests that consumers are opening their wallets again as budget uncertainty recedes,” he said.
He added that lower inflation and potential interest rate cuts could support spending in the months ahead.
“A sharp drop in inflation and two more interest rate cuts should support disposable income growth. The key ingredient remains consumer confidence.”
However, he cautioned that retail sales can be volatile and warned of possible fluctuations in the coming months.
Spending reset favours value and self-improvement
Nicholas Found, head of commercial content at Retail Economics, said January’s growth reflected more targeted spending rather than a broad recovery.
“January signals a reset in spending, where wellness, jewellery and practical home upgrades outperformed as consumers focus on self-improvement and long-term value,” he said.
While easing inflation has improved the outlook, he noted underlying volumes remain fragile and competition intense.
“For now, retail remains a market where value wins, but volumes lag. Growth is being redistributed, setting the tone for another year defined by market-share battles rather than broad-based recovery.”
Found added that rising employment and operating costs continue to squeeze margins, forcing retailers to cut costs and invest in automation to remain competitive.