Retail sales bounced back in January with a bigger-than-predicted rise thanks to strong growth in food stores as people ate more at home to save money, according to new official figures released this morning.
A separate survey also revealed that consumer confidence made a tentative recovery this month, as GfK’s long-running index showed a two-point rise in its headline rate to –20 in February.
Sales volumes jumped by 1.7% in January, compared with a fall of 0.6% in the previous month, the Office for National Statistics reported. This was much higher than the predicted rise of 0.3%.
Food stores lifted the headline figures as volumes shot up 5.6%, which was the largest rise since March 2020.
It ended a run of four consecutive months of decline for food sales as supermarkets, specialist food stores such as butchers and bakers, and alcohol and tobacco shops all increased over the month.
Food retailers told the ONS they attributed the big leap in sales to the fact shoppers were eating out less as households tightened their belts following the festive period.
However, non-food retailers registered a fall of 1.3% in January as consumers budgeted carefully on waning confidence.
And, more broadly, sales volumes fell by 0.6% in the three months to January 2025, compared with the three months to October 2024.
Kris Hamer, director of insight at the British Retail Consortium, said: “2025 got off to a good start with retail sales managing to weather the stormy January. Retailers put on extensive promotions, and customers who were looking to upgrade their furniture and household electrical appliances made the most of the many bargains that there were to be had. But, with consumer expectations for the economy falling almost 40pts since July 2024 and an unsteady job market, the next few months are hard to predict.”
Charlie Huggins, manager of the Quality Shares portfolio at Wealth Club, added: “Retail sales volumes came in much better than expected in January, but this was largely due to a significant recovery in food sales. Non-food stores saw sales decline by 1.3%, with clothing sales especially weak – hardly a sign that consumers are feeling flush.
“The large increase in food sales is clearly a positive for supermarkets, but it may be a worrying sign for other parts of the economy. More people eating at home is especially bad news for restaurants, pubs and bars. These sectors are in dire need of footfall, with their costs set to rise significantly in April following the autumn budget.”
All measures on GfK’s consumer confidence index registered increases in February in comparison to the prior month, with big rise in how consumers view their personal finances for the coming year, which climbed four points to +2.
Neil Bellamy, consumer insights director at NIQ GfK, said: “The Bank of England interest rate cut on 6 February will have brightened the mood for some people, but the majority are still struggling with a cost of living crisis that is far from over.
“Prices are still rising above the Bank of England’s target, and gas and electricity bills remain a challenge for many households.
“So, it’s no surprise that consumer views on the general economic situation are still lower than 12 months ago, suggesting that people don’t expect the economy to show any dramatic signs of improvement soon. Politicians looking for bright spots on the horizon will be disappointed.”
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