January brought a rebound in UK retail sales, as buyers rushed to purchase food from supermarkets and take advantage of new year discounts. Official statistics indicate an increase of 3.4% increase in retail sales, following a record drop in December. Shops selling food rose significantly, while department stores saw a positive impact from January sales. Increased spending, however, was accompanied by ongoing high inflation, meaning that consumers were paying more for less.
Inflation, despite slowing, remains high – at around 4% – and has failed to meet the Bank of England’s 2% target. Interest rates had previously been raised to keep prices in check, although it remains to be seen whether this will continue to be effective. Heather Bovill, Deputy Director for Surveys and Economic Indicators at the ONS, commented on the rise in sales across nearly all retail sectors, calling it a “particularly strong month for supermarkets.”
Sales fell significantly in December, possibly due to seasonal shopping occurring earlier in Black Friday sales. Around 46% of just under 2400 people surveyed suggested they would spend less on Christmas food and gifts as a result of rising costs. The fall in retail sales for December also impacted gross domestic product, to a degree. Uncertainty remains as to whether the January rebound represents a broader turning point for the retail sector and consumer spending in the UK
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