Retail spending picked up sharply in January as customers flocked to post-Christmas gross sales, providing some aid to a sector hit by a subdued festive interval and rising employment prices.
Figures from the British Retail Consortium (BRC) and KPMG confirmed that retail gross sales elevated by 2.7 per cent year-on-year final month, up from progress of simply 1.2 per cent in December.
The advance means that many consumers delayed spending earlier than Christmas and as an alternative waited for deeper January reductions.
Helen Dickinson, chief government of the BRC, stated: “A colorless December gave method to a brighter January as retail gross sales picked up tempo. Many consumers had held off Christmas spending and waited for the January gross sales, with the beginning of the brand new yr exhibiting the strongest progress.”
Linda Ellett, UK head of shopper, retail and leisure at KPMG, stated discounting proved decisive. “January gross sales enticed customers to spend, with private electronics, furnishings, and kids’s garments and toys among the many best-performing classes,” she stated.
She added that New Yr resolutions had additionally pushed spending in health-related classes, together with wellness-focused food and drinks.
Meals gross sales rose by 3.8 per cent in contrast with January final yr, up from annual progress of two.8 per cent beforehand. Non-food gross sales elevated by 1.7 per cent year-on-year.
Nonetheless, the info will present restricted consolation to retailers involved about margins. The reliance on heavy discounting to stimulate demand means that underlying shopper confidence stays fragile.
In response to the Workplace for Nationwide Statistics, retail gross sales volumes are nonetheless 1.5 per cent under pre-pandemic ranges. Official figures confirmed gross sales rose by solely 0.4 per cent in December.
Client spending is a significant driver of UK financial progress, and weak spot in retail demand has weighed on GDP for the reason that pandemic, as households grappled with rising dwelling prices and better borrowing charges.
Monetary markets anticipate the Financial institution of England to chop rates of interest two or thrice this yr, probably starting as early as March. Charges have been decreased 4 instances in 2025 to three.75 per cent, their lowest degree in three years.
The Financial institution’s newest forecasts point out inflation is more likely to return to its 2 per cent goal by the spring. Nonetheless, the central financial institution additionally expects unemployment to rise to five.3 per cent this yr, a post-pandemic excessive, probably dampening shopper confidence.
Retailers are additionally contending with greater working prices following the Labour authorities’s £25 billion improve in employer nationwide insurance coverage contributions and additional rises within the minimal wage.
With official GDP knowledge for the ultimate quarter of final yr due later this week, January’s rebound presents tentative indicators of resilience — however the sector’s restoration stays intently tied to rates of interest, family incomes and the power of shopper confidence within the months forward.
