January sales tempted squeezed shoppers: but it’s just a blip

Retail sales volumes rose 0.5% in January, after falling 1.2% in December. They’re still 1.4% below their pre-covid level in February 2020. Sales are continuing on the downward trend that has settled in since summer 2021. A rise in non-food sales – including petrol – offset a fall in food sales.

January retail sales were announced today: Retail sales, Great Britain – Office for National Statistics (ons.gov.uk)

Sarah Coles, head of personal finance, Hargreaves Lansdown said: “January sales tempted even the most squeezed shoppers, as deals pushed overall retail sales up 0.5%. Things looked even healthier for non-food stores – up 0.6%, department stores – up 0.8%, and online retailers – up 2%. However, this isn’t a turnaround in the fortunes of the retailers: it’s highly likely that this is just a bump in the slide that started back in summer 2021.

“Non-food sales benefited from the January sales – which started as early as Christmas Eve and ran to the end of the month. However, this rise is only likely to be a temporary blip, as we seized the chance to snap up everything from cosmetics to carpets while there were some decent bargains around. Given the fall in December, there’s a decent chance some of this was us putting off seasonal spending until the sales kicked in.

“On a rolling three-month basis, sales are clearly still on the slide that  kicked off back in summer 2021. Prices have been rising for so long that more of us are running on empty. The HL Savings & Resilience Barometer shows that we’ve lost three fifths of the boost we got during the pandemic from things like lockdown savings, so we’re having to make difficult choices about what we can afford.

“Food sales volumes fell 0.5% – following a 0.7% drop a month earlier, as we continued to tighten our belts in the supermarket. Separate ONS figures show that almost half of us are spending less on food and non-essentials (44%). And because food prices were up 16.7% in the year to January, it means we’re putting less in the trolley, to avoid busting the budget.

“Drivers took the opportunity to fill the tanks in January as fuel prices fell back to the levels we last saw in February last year, and sales volumes rose 1.7%. Finally, we took the trips we’ve been postponing ever since a tank of petrol started to become a rare and expensive treat.”