Official data shows retail sales in the UK rebounded in January, providing some hope that the economy will start to improve in the months ahead after it was confirmed yesterday that the country fell into a recession in the second half of 2023.
Figures from the Office for National Statistics (ONS) show sales volumes climbed 3.4% last month following a record fall of 3.3% in December when cash-strapped shoppers cut back on their Christmas spending.
The ONS noted that January had seen the biggest monthly increase since April 2021, taking volumes back to the level of November 2023.
Sales volumes in all subsectors except clothing stores increased over the month, with food stores contributing the most (+3.4%) to the increase. This was a significant recovery from December’s fall of 3.1%, with supermarkets being the main driver.
Helped by January sales promotions, non-food stores returned to broadly expected levels, with the robust trading in sports shops and department stores contributing to a rise of 3.0% over the month following a 3.9% fall in December.
Economists suggested that the numbers show the UK is starting to shrug off some of the weakness seen at the end of last year, with lower inflation and firm wage growth expected to result in a pick in household spending in the coming months.
Joe Maher at research company Capital Economics said: “The strong pick-up in sales suggests the worst is now behind the retail sector and falling inflation and rising wages in 2024 will provide a strong platform for recovery.”
Meanwhile, Thomas Pugh, economist at audit firm RSM UK, stated that the jump in January sales volumes suggests the technical recession at the end of 2023 would not extend into 2024.
“While January’s pace of growth is unlikely to be maintained there are plenty of reasons to expect retail sales volumes to gradually recover this year,” he said, pointing to projections that inflation would be back at the Bank of England’s 2% target by the summer.
“This will kick-start a consumer-spending led recovery that should feed through into growing retail sales and see the economy finally return to growth,” Pugh added.
NAM Implications:
- “This will kick-start a consumer-spending led recovery that should feed through into growing retail sales and see the economy finally return to growth”.
- Hopefully…
