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Retail & Consumer

º£½ÇÊÓÆµ retail sales beat expectations in January amid discounting

Retail sales volumes rose 1.7 per cent in January, following a fall of 0.6 per cent in December, according to the ONS, as discounting encouraged shoppers to spend

Discount sales boosted grocers in January(Image: Getty)

British shoppers made a comeback in January, as bargain hunting drove the first monthly increase in retail sales volumes since August of the previous year.

According to the Office for National Statistics (ONS), retail sales volumes rose by 1.7% in January, following a 0.6% decline in December, surpassing analysts' expectations of a modest 0.3% growth, as reported by .

This surge was largely attributed to a 5.6% increase in food sales, which experts believe was fueled by spending on discounted items.

However, sales volumes at non-food stores, including department, clothing, and household shops, dropped by 1.3% over the month, with retailers and household goods stores citing reduced consumer confidence as the primary cause.

Alice Cowley, Retail Strategy Managing Director at Accenture, noted that the results were "not the splash retailers will have wished for," as consumers continued to be frugal with their spending post-Christmas.

Cowley added, "This past three-month period has fallen short of expectations for many, as shoppers increasingly prioritised essentials only in non-food categories and turned to own label food products, weakening margins."

Analysts have cautioned that relying heavily on discount spending will further erode already-thin profit margins, a situation that will be exacerbated by significant tax increases set to hit the retail sector in April.

The British Retail Consortium (BRC) has warned that the sector will face an additional £7 billion in costs due to the combined effects of a higher minimum wage, packaging tax, and changes to employer's national insurance contributions.