In January, British retail sales surged by a robust 1.7%, marking the sharpest increase since May last year, as per official data released on Friday. This rise indicated that consumers were willing to spend despite a gloomy economic outlook.
The sales growth exceeded all projections from a Reuters poll of economists, surpassing the median forecast of a 0.3% uptick.
Following the publication of the data, the British pound strengthened against the dollar.
This increase in month-on-month sales was the first since August. However, retail sales volumes for the three months leading to January declined by 0.6% compared to the preceding three months, highlighting the weakness at the end of the previous year.
Compared to last year, retail sales were up by 1.0%, surpassing the median forecast of 0.6% annual growth.
Many of the UK's prominent retailers, such as Next and Marks & Spencer, have predicted a challenging year ahead due to rising employer taxes, which may impact prices and employment.
Recent data indicated that inflation in January exceeded expectations, and both hiring and wage growth were stronger than predicted. Despite this, the Bank of England revised down its economic growth forecast for 2025.
In recent weeks, supermarket chains like Sainsbury's, Tesco, and Morrisons have announced a total of 3,600 job cuts.
A survey released earlier on Friday revealed that British consumers were slightly less pessimistic this month, reflecting an improved outlook on household finances following the BoE's recent interest rate reduction.