Shoppers splashed out in January but only after the biggest price cuts in two years, official figures showed on Friday.
Stripping out petrol prices, retail sales rose 1.2%, bouncing back from a tricky December where sales were hit by a Black Friday hangover.
But worries over retailers’ profit margins will be fuelled by the latest evidence of shoppers only being tempted by heavy discounting.
The Office for National Statistics’ deflator indicates prices are only 0.3% higher than a year ago, the lowest growth for two years. Food, clothing and shoe stores, as well as online shops, were the big beneficiaries.
Consumers are still nervous, says EY Item Club’s Howard Archer.
He said: “Both January and November saw spikes in sales volumes, buoyed by clearance sales in January and Black Friday. A major concern for retailers will be that cautious consumers limit spending in the near term at least, due to the heightened uncertainties over Brexit.”
