UK retail sales rebounded dramatically in January, with volumes rising by 3.4% after a disastrous December, offering hope that the UK’s recession will prove to be the shortest in history.
That comes after an extremely disappointing December in which sales fell by 3.2%.
The rebound was much faster that economists expected.
Prices continued to rise though, with the amount spent up by 3.9%. Given the 3.4% growth in volumes, that would suggest prices were up by about 0.5%.
The huge resurgence was the biggest increase since April 2021 when shops reopened after the third Covid lockdown. However, it effectively just puts sales back to where they were in November.
The strong figures will boost hopes that the UK can quickly escape recession, after it was confirmed yesterday that the British economy had declined for two consecutive quarters.
Joe Maher, assistant economist at Capital Economics, said: “The 3.4% month-on-month rebound in retail sales volumes in January will put an end to the retail recession and perhaps even to the wider economy recession in Q1. 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.
“Overall, today’s release was stronger than expected and suggests the drag from higher interest rates on consumer spending is fading fast and points to the economy soon moving out of recession. As a result, after a depressing 2023 for retailers, a better year should be in store in 2024.”
Sales were up in all sectors except clothing.
Heather Bovill, deputy director for Surveys and Economic Indicators at the ONS, said: “After a very weak December, retail sales rebounded in January with the largest monthly rise since April 2021. This means that overall sales have now recovered to pre-December levels, although if we look at the broader picture, they are still below where they were pre-pandemic.
“Sales increased across nearly all retail sectors, and it was a particularly strong month for supermarkets. Household goods stores, sports shops and department store retailers were amongst those reporting robust trading due to January sales promotions. A fall in prices at the pump also meant a solid month for fuel sales.
“Clothing shops were the only area not to see growth this month.”
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