UK retailers saw a surprise increase in sales in January, following the post-Christmas period, with sales rising both in-store and online.
Official figures released by the Office for National Statistics (ONS) indicate that UK shop sales volumes rose by 0.5% in January after a fall in December. However, when compared to January last year, sales volumes fell by 5.1%.
The cost of living has risen sharply, largely due to increasing energy costs, resulting in pressure on households. While the inflation rate has started to ease, it remains close to a 40-year high at 10.1%. The ONS noted that online retailers benefited from January sales promotions. However, food store sales fell as shoppers purchased fewer items due to the high cost of living and food prices.
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Retail sales volumes are still below pre-pandemic levels as a whole. The ONS revealed that the fall in retail sales in December was steeper than initially estimated as consumers cut back on spending. The director of economic statistics at the ONS, Darren Morgan, noted that sales for fuel rose as prices continue to fall, and discounts helped to boost sales for online retailers, cosmetic stores, jewellers, and carpet and furnishing shops. However, clothing store sales fell sharply after four consecutive months of growth.
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Phil Monkhouse, Head of Sales at global financial services firm Ebury, commented: “After a disappointing December, there was certainly no dry January as retail sales bounced back at the start of 2023 as consumer hit the sales, making it a hat-trick of economic good news this week.
“Following a surprise to the downside on this week’s inflation data and persistently low unemployment there is growing optimism over the outlook for the UK economy. This is backed up by expectations that interest rates could be nearing a peak and signs of continued resilience in households budgets.
“For retailers, e-commerce is likely to become increasingly vital in their business models as supply chain issues continue to ease opening up global markets. Optimism over a breakthrough on the Northern Ireland protocol could also smooth export issues with the European Union in a further boost for UK business.
“However, with many sources of global economic uncertainty remaining hedging against further turbulence is a necessity for retailers. When it comes to ensuring supply confidence and mitigating currency volatility, they must ensure they have the correct mechanisms in place to support their growth and prosperity.”
