January retail sales boosted as cost of living crisis looms
January retail sales volumes lifted 1.9 per cent last month while retailers prepare for consumers to limit spending as bills soar.
According to the latest retail data from the Office for National Statistics (ONS), sales volumes marked the largest monthly increase since April 2021 when non-essential retailing reopened.
An increase came after a four per cent drop in December amid reduced retail footfall because of Covid fears and earlier Christmas shopping than usual in the autumn months.
The sales lift comes as retailers have hiked prices and cut back on discounts in a bid to pass on surging costs to customers.
Paul Martin, UK head of retail, KPMG, said while the sector “started the year in relatively good health,” firms were eyeing the financial pressures for shoppers on the horizon.
Martin said: “Retailers will be acutely aware however that the cost of living squeeze could see consumers scrutinising their spending more over the coming weeks and months, impacting trade. This picture will be compounded if those who managed to save during the pandemic decide the time isn’t right to spend what they’ve accrued.”
It comes as businesses including big names like Nestlé and Unilever, have announced price increases.
Shoppers flocked to household goods stores last month, where sales volumes lifted 7.5 per cent. This increase was driven by strong growth in furniture and lighting stores (16.6 per cent) and electrical goods stores (16.0 per cent).
Fuel sales volumes increased 4.1 per cent in January, following a five per cent drop in December when Covid restrictions saw less people travelling to work.
Fuel sales volumes were 3.3 per cent below pre-coronavirus February 2020 levels, in January 2022.
Sales at clothing stores dropped five per cent in January, possibly due to less discounting compared with other years amid soaring inflation.
Shoppers also spent less online last month, with a 4.5 per cent drop compared to December 2021.
What’s more, the proportion of online sales fell to 25.3 per cent from 27 per cent in December 2021, in a continuation of a trend thanks to the disappearance of lockdown rules.
However, the proportion of sales made online was still above the pre-pandemic level of 19.8 per cent in February 2020.