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Is the recession already over? Retail sales roared back in January after grim Christmas in glimmer of light for Jeremy Hunt ahead of Budget


Shops roared back from a dire Christmas last month fuelling hopes that Britain might already be out of recession.

Retail sales saw the biggest single monthly rise in close to three years, with volumes soaring 3.4 per cent during January.

That was far better than had been expected by analysts, and offset a dismal performance in December when the level fell 3.3 per cent.

Supermarkets were among the winners, although the ONS said the recovery was broad-based.  

It was the fastest increase since April 2021, the month when non-essential retailers were allowed to reopen following the third national lockdown for the Covid-19 pandemic.

Retail sales saw the biggest single monthly rise in close to three years, with volumes soaring 3.4 per cent during January

Retail sales saw the biggest single monthly rise in close to three years, with volumes soaring 3.4 per cent during January

‘After a very weak December, retail sales rebounded in January with the largest monthly rise since April 2021,’ said Heather Bovill, deputy director for surveys and economic indicators at the ONS.

‘This means that overall sales have now recovered to pre-December levels, although if we look at the broader picture, they are still below where they were pre-pandemic.

The January reading was higher than the 1.5 per cent that economists had pencilled in, according to an average supplied by Pantheon Macroeconomics.

It came a day after official figures confirmed that the UK slipped into recession at the end of 2023, with GDP dipping by 0.3 per cent in the final quarter. The technical definition of a recession is two consecutive quarters of contraction.

The recovery could offer a glimmer of light for Jeremy Hunt ahead of his Budget next month.  

A lot of the change in retail sales was due to food shops, which saw sales increase 3.4 per cent during the months. 

The only type of retailer that had a worse performance last month were those selling clothes.

‘Sales increased across nearly all retail sectors, and it was a particularly strong month for supermarkets,’ Ms Bovill said.

‘Household goods stores, sports shops and department store retailers were amongst those reporting robust trading due to January sales promotions.

It came a day after official figures confirmed that the UK slipped into recession at the end of 2023, with GDP dipping by 0.3 per cent in the final quarter

It came a day after official figures confirmed that the UK slipped into recession at the end of 2023, with GDP dipping by 0.3 per cent in the final quarter

‘A fall in prices at the pump also meant a solid month for fuel sales.

‘Clothing shops were the only area not to see growth this month.’

Capital Economics said the rebound should ‘put an end to the retail recession and perhaps even to the wider economy recession’ in the current quarter. 

‘The strong pick up in sales suggests the worst is now behind the retail sector and falling inflation and rising wages in 2024 will provide a strong platform for recovery,’ the firm said. 



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