UK retail sales grew at their fastest monthly pace in over two years in January, exceeding expectations as consumers splashed money on winter clothes and computers, official figures released on Friday (19 February) showed.
According to the Office for National Statistics (ONS), the volume of retail sales grew 2.3% month-on-month in January compared with a 0.9% decline in the previous month and analysts' expectations for a 0.7% increase, while the quantity bought in the retail industry rose 5.2% year-on-year last month, recording growth for the 33rd consecutive month.
Average store prices including petrol stations fell by 2.6% in January 2016 compared with January 2015, the 19th consecutive month of year-on-year price falls, while the amount spent in the retail industry rose 2.4% year-on-year in January and 2.3% month-on-month.
The ONS added UK retailers registered another strong performance in online sales, with the value of goods bought online increasing by 10.4% in January 2016 compared with January 2015 and rising by 2.7% compared with December 2015.
"The prospects for consumer spending still look relatively healthy for 2016, with purchasing power likely decent and employment high and rising," said Howard Archer, chief UK and European economist at IHS Global Insight.
"Nevertheless, it is notable that the positive gap between earnings growth and consumer price inflation has diminished appreciably recently, thereby diluting consumers' purchasing power even though it is still decent."
Data released earlier this week by the British Retail Consortium and Springboard (BRC) showed retail sales in January rose 1.2% year-on-year, reverting December's 2.2% decline as all the three main kinds of retail destination – high street retailers, retail parks and out-of-town centres – saw the number of customers increase for the first time in almost five years.
"With retail sales higher than expected last month, it's great news that consumers took advantage of the January sales to pick up some bargains," said Martin Lane, representative at www.money.co.uk
"However, this jump in spend could simply be a sign of increased consumer debt. So while retailers may be rubbing their hands together with glee, this could spell hard times ahead for shoppers who can't pay off their debts."