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Retail sales rising by 1.7% in January may be "reflective of consumers deferring financial difficulties through borrowing"

ended 21. February 2025

Retail sales volumes are estimated to have risen by 1.7% in January 2025, according to official data published this morning. This follows a fall of 0.6% in December 2024, revised down from a fall of 0.3%. Food store sales volumes grew strongly in January 2025, following falls in recent months. More broadly, sales volumes fell by 0.6% in the three months to January 2025, compared with the three months to October 2024, but rose by 1.4%, compared with the three months to January 2024. Newspage asked experts for their views, below.

2 responses from the Newspage community

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Anita Wright
Chartered Financial Planner at Ribble Wealth Management
A 1.7% increase in retail sales volumes for January 2025 might seem like a positive headline. However, looking beyond the surface, there are clear warning signs that this is not necessarily a reason to celebrate. Direct debit failures increased by 4% in December and a further 1% in January, indicating that more consumers are struggling to meet their financial commitments. Credit card spending also surged in December 2024, implying that many may be relying on borrowing rather than disposable income to maintain their spending. Both company and individual insolvencies rose by 6% in January, underscoring the financial distress faced by businesses and consumers alike. Inflation increased to 3% in January, further squeezing household budgets and eroding purchasing power. While retail sales volumes have improved, this may be more reflective of consumers deferring financial difficulties through borrowing rather than a genuine improvement in economic conditions.
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Marty Bauer
Retail and Ecommerce Expert at Omnisend
The January retail sales data is a welcome curveball given the headwinds facing the UK high street. These headwinds may be reflected in the weaker quarterly figure compared to the previous 3 months. Our data shows UK retailers have sent out 14% more marketing emails in the first seven weeks of 2025 compared to the same period last year. This may reflect the fact that consumers are feeling the pinch and are proving harder to convert than in the past. This is understandable given that inflation is once again on the rise, interest rates are far higher than what they were for well over a decade and many retailers, due to the impending National Insurance hikes, are having to increase prices. Consumer confidence is weak and the economy is generating little if any growth. A stagnant economy coupled with fiscal pressures from the Budget are also potentially creating fears around job certainty, which again makes people less likely to spend, which hurts retailers, both high street and online.