ONS Data Shows Retail Sales Volumes Rose In January

The ONS has published retail sales data for January 2025.

Main points

• Retail sales volumes (quantity bought) are estimated to have risen by 1.7% during January 2025, following a 0.6% fall in December (revised down from a fall of 0.3% in the last bulletin). Monthly index levels in January 2025 were their highest since August 2024. Sales volumes rose by 1.0% over the year to January 2025.
  
  
• More broadly, there was a 0.6% fall across the three months to January 2025, when compared with the three months to October 2024. This is because of low November and December sales in 2024. There was a 1.4% rise when comparing with the same period last year. 
  
  
• Volumes were down by 1.3%, compared with their pre-coronavirus (COVID-19) pandemic level in February 2020.
  
  

• Food stores sales volumes rose by 5.6% on the month. This is the largest rise since March 2020, putting index levels at their highest since June 2023. This follows four consecutive falls on the month, ending in December 2024 when index levels were their lowest since April 2013. Supermarkets, specialist food stores like butchers and bakers, and alcohol and tobacco stores all rose over the month. Retailers suggested that the increase was because of more people eating at home in January.

• Non-food stores – the total of department, clothing, household and other non-food stores – fell 1.3% over the month. Clothing retailers and household goods stores suggested the fall was because of reduced consumer confidence.

• Non-store retailers' sales volumes rose 2.4% on the month, partially rebounding from a 3.4% fall in December 2024. Retailers in this sector reported post-Christmas sales remaining strong.

• The amount spent online, known as "online spending values", fell by 1.7% over the month to January 2025. It fell by 4.8% when comparing the three months to January 2025 with the three months to October 2024. However, sales values rose by 0.8% when comparing January 2025 with January 2024.

• Total spend – the sum of in-store and online sales – rose by 2.6% over the month. As a result, the proportion of sales made online fell from 26.9% in December 2024 to 25.7% in January.

Commentary

Responding to the latest ONS Retail Sales Index figures, which showed sales up 2.6% by value, and up 1.2% by volume, Kris Hamer, Director of Insight at the British Retail Consortium, said:
 
“2025 got off to a good start with retail sales managing to weather the stormy January. Retailers put on extensive promotions, and customers who were looking to upgrade their furniture and household electrical appliances made the most of the many bargains that there were to be had. But, with consumer expectations for the economy falling almost 40pts since July 2024 and an unsteady job market, the next few months are hard to predict.

“This boost to sales barely touches the sides of the £7bn in new costs from the Budget and packaging levy facing the industry this year. The industry is already paying more than its fair share of tax and with retailers already doing all they can to absorb existing costs, retailers will be left with little choice but to increase prices or reduce investment in jobs and shops, or both. To mitigate this, Government must ensure that its proposed business rates reform does not result in any shop paying higher rates than they already do.”

Commenting on the Office of National Statistics retail sales index for January 2025, Jacqueline Windsor, Head of Retail at PwC UK:  

"Following a weaker-than-expected December, retail sales recovered strongly in January with headline retail sales volumes rising by 1.7%. Compared with last January, and excluding petrol, this represents a 2.6% increase in pounds spent at retailers, with year-on-year growth across almost all categories of retail."

"Grocery sales performed particularly well, increasing by 2.9% year on year, albeit partly reflecting higher prices as supermarkets began to pass through inflation to shoppers. Nevertheless, grocery sales volumes still increased by 0.4%." 

"Conversely, following a stronger end of 2024 for fashion, helped by widespread discounting, clothing retailers saw sales fall by 2.4%, making this the worst performing category."

"Despite the colder weather, the high street benefited from the fifth sunniest January on record, with footfall recovering. As a result, penetration of online retailers fell from 26.9% in December to 25.7% in January, making this the weakest month for online retailers since the disruption caused by postal strikes in December 2022."

"While January has proven to be a better-than-expected start to the new year, retailers will be hoping that this momentum continues, despite weakening consumer sentiment. The wider economic climate will become increasingly challenging for the retail sector, as input cost inflation rebounds and higher labour costs and business rates increases hit in April."

Louise McCoy, Managing Director of Start Up Loans Products, British Business Bank:

“The latest ONS retail data is positive news. Retail is an important sector which was worth £110bn in 2023, employing around 2.7m people. At Start Up Loans we’ve also seen enthusiasm from business owners to set up retail businesses with our volume of loans rising 5% between 2023 and 2024. This means business owners are still keen to set up shop, which is good for the economy and job creation.”

David Morrison, Senior Market Analyst at FCA-regulated fintech and financial services provider, Trade Nation, comments:

“The latest data from the ONS shows that retail sales volumes have risen by 1.7% in January 2025, following a 0.6% fall (after revised figures) in December 2024. The large part of this growth came from food stores which saw a 5.6% rise on the month, the largest since March 2020 and their highest since June 2023.

“However, there was a decline in non-food store sales volumes, which fell by 1.3% over the month. There was also a fall in the amount spent online, by 1.7%. This comes as no surprise following the inflation figures of 3% that were seen last week. It further highlights the lack of spending power consumers currently have, as they act more cautiously with buying non-essential goods.

“Retail Sales rose 1.0% on an annualised basis which was also above the consensus expectation. Sterling rallied on the news as on the face of it the stronger numbers make it more difficult for the Bank of England to justify cutting rates.  But Retail Sales is a volatile data point, and the real issue for the Bank is the jump in inflation that we saw earlier this week.”

Source : ONS, BRC, PwC, Start Up Loans, Trade Nation

Image : Jason Batterham / Shutterstock / 671551474

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