Brits hit the sales but are still counting their pennies

Retail sales were up 0.5% in January as people made the most of post-Christmas sales, the Office for National Statistics announced today.

Sales volumes were down 0.9% in the 3 months to January 2023 but the amount spent was up by 0.8%.

Food and clothing sales were down but shoppers splashed out on cosmetics and jewellery as retailers slashed prices.

Danni Hewson, AJ Bell head of financial analysis, comments on January’s retail sales figures: “When your money isn’t stretching as far as it did, it makes sense to wait for the sales you know are coming. Many families decided to cut back on their Christmas gift giving and there will also be plenty of people who chose to give cash with the expectation that their children or other family members could treat themselves to the things they really wanted at a price that looked much nicer.

“Inflation might be falling but it’s taking its sweet time and even with that cooling breeze households are getting used to the new normal; a world where living standards have been eroded and the price of pretty much everything seems to creep up every week.

“With celebrations and family gatherings over for another year people are making smart choices, trading down to a cheaper supermarket, hunting out own labels and putting fewer items in their baskets.

“The glad rags have been put away and there’s no need to add to wardrobes when the weather’s grey and dreary and you’ve nowhere to go and be seen.

“Retailers will view January’s figures with mixed emotions. The fact people have been spending in what’s often a difficult month will be welcome, but sales do little to bolster margins.

“People can’t spend what they don’t have, and they will vote with their feet if they feel something has become too expensive. The old adage is the best cure for higher prices is higher prices themselves and just looking at the uptick in fuel sales now the price at the pump is at a more reasonable level shows habits will flex and bend if needed.

“Lockdowns forced us all onto our phones and tablets if we wanted to shop, but it’s clear we still like to get out and try before we buy. Online sales have fallen once again, finding their level and giving non-store businesses plenty to think about.

“In the same way high streets went through a brutal evolution a few years ago, the online marketplace is discovering that too much competition is bad for business. We are spending more online than we did before the pandemic, but those lofty heights of 2020 are a distant memory, and all retailers will be watching to see where the balance finally settles.”