Retail sales rebound more strongly than expected in January

(Sharecast News) - Retail sales bounced back more than expected last month, according to figures released on Friday by the Office for National Statistics. Retail sales grew 1.7% on the month following four consecutive months of falls and after a downwardly-revised 0.6% drop in December. Economists were expecting a smaller increase of 0.3%.

The ONS said food store sales volumes grew strongly in January 2025, following falls in recent months.

More broadly, sales volumes declined by 0.6% in the three months to January 2025, compared with the three months to October 2024, but they were up 1.4% compared with the three months to January 2024.

Food stores sales volumes rose 5.6% on the month - the largest jump since March 2020.

Sales at non-food stores - the total of department, clothing, household and other non-food stores - fell 1.3%. Clothing retailers and household goods stores suggested the fall was due to reduced consumer confidence.

Paul Dales, chief UK economist at Capital Economics, said: "The 1.7% m/m leap in retail sales volumes in January (CE +1.0%, consensus +0.3%) suggests the retail sector shot out of the blocks at the start of the year.

"But some of that strength will have come at the expense of weakness in other parts of the economy. And with households in a fairly glum mood, we doubt it will last."