British retail sales saw an unexpected surge in January, rising by 1.7%—the largest monthly increase since May last year—according to official data released on Friday. The sharp jump suggests

that consumers remained willing to spend despite ongoing economic uncertainty.

The rise in sales volumes far exceeded expectations, with economists in a Reuters poll predicting a modest 0.3% increase. In response to the data, the British pound strengthened against the US dollar.

This marks the first monthly increase in retail sales since August. However, sales volumes for the three months leading up to January still declined by 0.6% compared to the previous quarter, reflecting the sluggish retail performance at the end of 2024. Year-on-year, retail sales grew by 1.0%, surpassing the anticipated 0.6% increase.

Despite January's strong performance, major UK retailers—including Next and Marks & Spencer—have warned of a challenging year ahead. Rising employer taxes and potential price pressures could impact both businesses and consumers.

Earlier this week, data revealed a stronger-than-expected rise in inflation for January, alongside robust hiring and wage growth. Meanwhile, the Bank of England recently slashed its 2025 economic growth forecast by half.

In the retail sector, job cuts have already begun, with supermarket giants Sainsbury’s, Tesco, and Morrisons collectively announcing 3,600 layoffs in recent weeks.

On a more optimistic note, a survey released Friday indicated a slight improvement in consumer sentiment. The Bank of England’s recent interest rate cut has lifted expectations for household finances, offering some hope amid economic uncertainty. Photo by Tony Webster from Portland, Oregon, United States, Wikimedia commons.