Retail sales in the United Kingdom experienced a modest yet notable increase in January, with official figures revealing a growth of 1.8 per cent compared to the previous month. According to data released by the Office for National Statistics (ONS), this positive trend was primarily fueled by robust performances in automotive fuel sales, art galleries, and technology retailers. However, the overall growth was partially offset by a significant decline in supermarket sales, highlighting a divergence within the retail sector.
Three-Month Overview and Sectoral Performance
On a three-month basis, retail sales showed a slight uptick, growing by 0.1 per cent in the period leading up to January. This follows a weaker performance in November, indicating a gradual recovery as the new year began. The January growth rate of 1.8 per cent marks a substantial improvement from December's 0.4 per cent increase, suggesting a strengthening consumer environment despite ongoing economic challenges.
While the volume of retail sales rose in January, the total value of spending experienced a sharp decline of 37 per cent, dropping from £59.9 million in December to £37.9 million in January. This disparity underscores the complex dynamics at play, where increased transaction numbers do not necessarily translate to higher monetary value, reflecting cautious consumer behavior and potential price adjustments.
Non-Food Retailers Outperform Supermarkets
The retail landscape in January was characterized by a clear divide between non-food retailers and supermarkets. Non-food sectors, including commercial art galleries, computer and telecoms retailers, and furniture stores, demonstrated sustained strong performance. In contrast, food retailers faced a significant downturn, with spending in this category plummeting by 31 per cent from £22.9 million during the busy Christmas period to £15.7 million in January.
Grant Fitzner, chief economist at the ONS, commented on the findings, stating, "Retail sales rose slightly in the latest three months, as sales continued to pick up in the new year following a weak November. Motor fuel sales increased a little across the period, while sales of art works, tech retailers, and furniture stores also performed well. These were partially offset by falls in supermarket sales."
Online Sales Surge Amid Weather Influences
Online retail sales showed remarkable resilience and growth, with a year-on-year increase of 10.8 per cent for the three months to January. Additionally, online sales rose by 1.8 per cent compared to the three months ending in October 2025. The ONS attributed this surge in part to higher rainfall during the period, which discouraged in-person shopping and drove consumers toward digital platforms.
Industry Challenges and Economic Context
Despite the positive sales figures, retailers are navigating a challenging economic environment. Nicholas Found, head of commercial content at Retail Economics, highlighted the ongoing pressures, noting, "For now, retail remains a market where value wins, but volumes lag. Inflation is easing, yet growth of underlying units remains subdued as households spend carefully rather than freely."
Retailers are also contending with record-high employment costs, exacerbated by impending Labour employment reforms. Chief financial officers across the sector have warned that these rising costs may necessitate job cuts as businesses strive to maintain profitability. The combination of cautious consumer spending and mounting operational expenses poses a significant hurdle for the retail industry's long-term sustainability.
In summary, the UK retail sector in January presented a mixed picture of growth driven by specific non-food categories and online sales, tempered by declines in supermarket performance and broader economic challenges. As retailers adapt to evolving consumer preferences and economic pressures, the coming months will be critical in shaping the trajectory of the industry.
