British retail sales increased by 1.8 per cent in January, which the Office for National Statistics (ONS) said is more than expected from December, and the biggest rise since May 2024.
This is according to the latest official figures which counteract many economists’ predictions that retail sales would only rise by 0.2 per cent on the month, adding to signs that the economy is beginning to pick up after a weak-ish final quarter of 2025.
However, the sharp increase in retail sales at the end of last year had been unexpected, experts say, and was driven by strong online performance, and followed the Autumn budget which gave some further clarification on the extent of tax rises needed to fund higher public spending.
On an annual basis, the ONS reported that retail sales rose by 4.5 per cent last month compared to January 2025, revised down from the earlier announcement of 2.5 per cent annual growth.
Britain’s economy barely grew at the end of 2025, figures showed last week, and the Bank of England this month cut its forecast for growth for 2026 to 0.9 per cent from 1.2 per cent. However, some business surveys have pointed to a pick-up in activity at the start of 2026.
Thomas Pugh, Chief Economist at RSM UK, said the sales rebound last month “suggests that consumers are opening their wallets again as budget uncertainty recedes”.
He added there were “good reasons to be hopeful for retail sales over the rest of the year”.
This is somewhat positive news and will likely give hope of better conditions for retailers after a tough start to the year for the fashion and footwear industries, with the collapse of brands like Russell & Bromley, LK Bennett, and Quiz.
