Retail sales in the United Kingdom experienced rapid growth at the highest rate since early last year, highlighting the impact consumer spending will have in invigorating the country's economic recovery into the first quarter of 2024.
As reported by the Office for National Statistics on Friday, there was a 3.4 percent rebound in retail sales volumes in January, succeeding a record low of 3.3 percent the previous month. This significant increase, the largest witnessed since April 2021, surpassed economists' anticipated moderate growth of 1.5 percent.
Not taking into account auto fuel, which saw an increase of 3.2 percent following a 3.5 percent fall in December, there was a slight lag behind economists' projected 1.7 percent rise in retail sales.
According to the data, a monthly increase was reported in all sub-sectors of sales volumes with the exception of clothing stores. Both food store sales and non-food store sales experienced growth, increasing 3.4 and 3.0 percent respectively, and auto fuel sales notably saw a substantial rebound of 5.4 percent.
Over the course of a year, there was a reversal in the retail sales trend with a recorded annual increase of 0.7 percent, a stark contrast to a 2.4 percent decrease observed just a month ago. Excluding auto fuel from sales, there was also a 0.7 percent rise following a 2.1 percent decline.
However, the sales volume went down slightly by 0.2 percent from the previous three months, marking the smallest fall since August 2023.
Joe Maher, an economist from Capital Economics, predicts an upward turn for the retail sector in 2024 due to expected wage increases and a diminishing burden from high-interest rates. Maher also forecasts the end of the UK's recession in the first quarter.
