January proved to be a surprisingly fruitful month for retailers, as bargain-hunting shoppers prompted the first monthly increase in sales volumes since last summer. Official figures reveal a 1.7% surge in sales volumes, far outstripping analysts' modest predictions of 0.3% growth. This marks a welcome turnaround for the sector, which had suffered dwindling trade in December and throughout the final quarter of 2024.
The upswing was largely fuelled by a significant rise in food sales, the highest since the onset of Covid-19 lockdowns in March 2020. According to the Office for National Statistics, food sales rocketed by 5.6%, with supermarkets and specialist outlets like butchers and bakers enjoying robust trade due to increased home dining.
This could potentially be good news for Labour, as heightened retail spending typically bolsters economic growth—a top priority for the Government. However, clothing retailers and other non-food sellers experienced a slower pace of trade, with sales dipping by 1.3% over the month.
Hannah Finselbach, senior statistician at ONS, commented: "Retail sales rebounded strongly in January following four months of consecutive falls. "However, clothing shops and household goods stores had less of a successful month with retailers reporting lacklustre sales due to weak consumer confidence. Looking at the broader picture, retail sales have decreased across the three-month period and are below pre-pandemic levels.".
However, Susannah Streeter, an analyst at Hargreaves Lansdown, noted a "more spring in the step" of the sector. She observed: "Shoppers appeared to defy the gloom and bought more food to cheer up the long winter nights,". On the other hand, not all experts shared this optimism. Alice Cowley, from consultancy firm Accenture, suggested it was "not the splash retailers will have wished for".
"Consumers have kept a tight grip on their purse strings post-Christmas. This past three-month period has fallen short of expectations for many, as shoppers increasingly prioritised essentials only in non-food categories and turned to own label food products, weakening margins.".
