According to the Office for National Statistics, the volume of UK retail sales increased by 0.5% in January (ONS). This follows a decrease in December and is still lower than levels prior to the pandemic. Since last year, prices have risen sharply due to soaring energy costs, putting pressure on households.
The ONS reported that the inflation rate is beginning to decline, but it remains near a 40-year high at 10.1%. Food store sales decreased as consumers purchased less due to the rising cost of living and high food prices. However, online sales were boosted by January discounts.
Despite the January increase, retail sales volumes fell 5.1% compared to the same month last year. This reflects the impact of the pandemic on consumer spending. Additionally, the ONS reported that December’s decline in retail sales was steeper than previously estimated, as consumers reduced their spending.
The government has announced plans to assist businesses and families during the pandemic, including grants for stores, pubs, and restaurants and an extension of the furlough programme. It is anticipated that this will increase consumer confidence and stimulate spending in the coming months.
The increase in retail sales was a welcome boost to the economy, but many economists believe it is too early to determine whether or not the increase is sustainable. They are observing consumer trends closely as the United Kingdom continues to emerge from lockdown restrictions.
