UK retail sales bounce back in January after Omicron hit but outlook cloudy

Shoppers returned to the high street in droves last month as UK retail sales rebounded after the impact of the Omicron variant of coronavirus and the easing of related restrictions, new figures show.

The Office for National Statistics (ONS) said sales rose by 1.9 per cent in January, meaning they were 3.6 per cent above pre-pandemic levels.

However, it came after a 4 per cent fall in December when shoppers stayed at home in the run-up to Christmas as Omicron spread rapidly.

ONS director of economic statistics Darren Morgan said: “After a sluggish December, where the Omicron wave had a significant impact, retail sales rebounded in January with their biggest monthly rise since the shops reopened last spring.”

Despite the robust sales figures for Scotland and across the UK, experts have pointed to headwinds battering stores right now, with high inflation, rising public policy costs and stretched household finances all making trading difficult. Picture: Jane Barlow/PA

The rebound in sales was buoyed by strong home improvement demand, as people sought to spruce up their properties at the start of the year.

Meanwhile, fuel sales volumes rose by 4.1 per cent for the month, following a 5 per cent fall in December as increased home working hit travel patterns.

Morgan added: “It was a good month for garden centres, department and household goods stores, with particularly strong trading for furniture and lighting.

“Following a rise in high street footfall towards the end of the month, the proportion of online sales dropped to its lowest level since March 2020, while an increase in road traffic helped push fuel sales up from December.”

The figures also revealed that food sales dropped by 2.3 per cent for the month, representing the biggest fall since May last year, as people returned to restaurants and pubs. This resulted in food sales dropping below their pre-pandemic levels for the first time.

Earlier this week, it emerged that January had seen the best Scottish sales figures in six months amid “tentative signs of a recovery” on the high street and a push back towards pre-pandemic levels.

Industry figures showed that total sales north of the Border fell by 7.9 per cent last month compared with two years ago, in January 2020.

The January performance was an improvement of 5.1 percentage points from December 2021 and was the lowest two-year decline recorded since July last year, according to the Scottish Retail Consortium.

Susannah Streeter, senior investment and markets analyst at financial services group Hargreaves Lansdown, noted: “Retailers will be cheering on signs that shoppers are voting with their feet to support the high street, but plenty of big spenders may slink away in the months to come.

“At some point lockdown savings will be spent, and the rapid rise in prices on supermarket shelves, energy bills and petrol forecourts, combined with looming tax increases, is highly likely to put a dampener on consumer spending. The warning lights are already blinking in other data out this week,” she added.

Walid Koudmani, chief market analyst at financial brokerage XTB, said: “Today’s [ONS] retail sales figures continue to provide encouraging signs as the economy recovers from the pandemic and as businesses as well as consumers begin to adjust to rising inflation.”

A message from the Editor:

Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions