Retail sales volumes are estimated to have increased by 3.4% in January 2024 – the largest monthly rise since April 2021 – following a record fall of 3.3% in December 2023, according to the latest data from the Office for National Statistics.
Clothing was the only subsector not to see an increase in the first month of the year, perhaps hampered by two storms. Food stores such as supermarkets contributed most to the increase.
Furthermore, ONS reported household goods stores, sports shops and department store retailers were amongst those reporting “robust” trading due to January sales promotions.
The rise in retail volumes did not stop inflation sticking at 4% however, with rising energy prices creating a “counteracting effect”.
Jacqui Baker, head of retail at RSM UK, said: “A strong bounce back in retail sales last month provides a glimmer of hope for retailers following the sharp fall in December and a poor end to a tough year; but they’re not out of the woods yet. Retail spending was boosted by discounting in January and the continued demand for health and beauty products.
“January is typically a lacklustre month for the retail sector as consumers rein in spending after the Christmas period. But after a difficult Golden Quarter, the big uptick will feel like a win particularly when retailers are competing for spend as consumers look to chase away the January blues by booking holidays.
“Encouragingly, consumer confidence is on the up, reaching a two-year high in January. The hope is that if confidence continues to improve, this will result in a boost in retail sales figures. Plus, with a potential tax-free shopping U-turn and expected tax cuts on the chancellor’s agenda in the Spring Budget, households may be left with more money in their pockets, which could stimulate spending – providing a light at the end of the tunnel for retailers.”
Jon Boland, general manager of Clover in the UK, commented: “After news of the UK entering recession in the latter stages of last year, retailers will hope this latest data marks the start of a revival for the UK retail industry’s fortunes.
“A rebound in sales during January is a significant uplift for retailers, and 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. There is a growing sense of optimism among retailers and delivering a high-quality and tailored customer experience is vital for small businesses that want to capitalise on rising spending in an increasingly crowded field.”
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