Retailers enjoyed a bumper January after cutting prices to clear stock, with sales rising at the fastest rate in two years.
Retail sales volumes leapt 2.3% from December, the Office for National Statistics said, smashing forecasts from City economists for a rise of 0.8%. It was the biggest monthly rise since December 2013 and compares with a 1.4% decline in December.
The data suggests the post-Christmas sales went well on the high street, after a disappointing run-up to Christmas, when many retailers blamed warmer-than-usual weather. Clothing and shoe shops posted 3.3% growth last month while supermarkets and other grocers recorded 1.1% growth. The non-food sector as a whole grew by 3.6%.
Other stores, which include pharmacies and shops selling carpets, sporting goods or flowers, recorded the strongest growth, of 8.1%.
Melanie Richard, ONS head of retail sales statistics, said: “While all store types showed growth in January, the strongest performance came from the non-food sector. Department stores recorded good growth as retailers cut prices to clear stock and, along with household goods stores, are experiencing their longest period of sustained growth since before the economic downturn.”
Average store prices (including petrol stations) fell by 2.6% in January. ING economist James Smith said: “Over the past year, rising real wages and more recently, cheaper energy costs, have helped boost consumer confidence and spending. Indeed, as job creation remains strong, this trend looks set to continue over the coming months.”
However, others were less optimistic. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Looking ahead, it’s hard to see how even UK consumers will be able to keep increasing spending at the strong rates seen over recent months. Real income growth will fade as job growth slows from recent stellar rates, inflation revives and the fiscal squeeze intensifies, while little scope remains for households to reduce their saving.”
Retail sales rose 1.4% in the three months to January, up from 1.1% in the three months to December.
