Retail sales in Great Britain rose 1.8% in January, the largest monthly increase in almost two years, according to official data, as heavy discounting and post-Christmas sales drew consumers back to bigger ticket purchases.
The rise easily beat forecasts of a 0.2% rise and was partly driven by sales of artwork and antiques sales in January, alongside continued strong sales from online jewellers, the Office for National Statistics (ONS) said. It was the biggest monthly rise since May 2024.
On an annual basis, retail sales volumes were 4.5% higher, again higher than forecast.
However, in the three months to January, sales volumes were only up 0.1% compared with the three months to October, with fuel, furniture and tech among the biggest-selling categories over the period.
Business “continued to pick up in the new year following a weak November” for retailers, said Grant Fitzner, the ONS chief economist. “Motor fuel sales increased a little across the period, while sales of artworks, tech retailers and furniture stores also performed well.”
Economists suggested the figures offer an early sign that consumer confidence may be recovering after a difficult end to 2025.
Earlier this week, data showed that inflation fell sharply to 3% in January from 3.4% in December, increasing expectations that the Bank of England will soon cut interest rates, which would provide a further boost to consumers.
Thomas Pugh, the chief economist at RSM UK, said: “A sharp drop in inflation and two more interest rate cuts should support disposable income growth. The key ingredient remains consumer confidence.”
An unusually rainy January led to a boost in online sales as customers opted against heading out to the high street. E-commerce rose 1.3% month on month and 14.7% compared with January last year – the largest annual rise since April 2021.
Rob Wood, the chief UK economist at Pantheon Macroeconomics, said the figures provided “further evidence that economic activity is picking up smartly in the new year as budget uncertainty fades”.
However, he also said the figures were “too good to be true” in places, with soaring jewellery sales slightly exaggerating the improvement amid a rise in gold prices.
In-store household goods sales also bounced back after a weak December, clothing sales rose slightly and food sales volumes gained 1.2% month on month, the strongest since last July.
Cande Cooper, a retail partner at Deloitte, said: “It is clear that value is a priority for many consumers, with nearly a third taking advantage of in-store discounts and loyalty cards to keep costs down.
“The growth across non-food stores and household goods stores points to consumers prioritising finding the best deals, but the bigger picture could be that some are starting to loosen the purse strings.”
There was also an increase in online sales of sports supplements, the ONS said. Paul Dales, the chief UK economist at Capital Economics, said the figures suggested “the new year resolution health kick has made the economy look more healthy” but he warned: “With employment growth weak and wage growth slowing, households won’t be able to maintain this rate of spending.”
