Retail sales slow in January as cost-of-living crisis continues to bite

Retailers suffered a lacklustre January as consumers began a third year grappling with cost-of-living pressures, new figures show.

Easing inflation and weak consumer demand saw total UK retail sales from 31 December 2023 to 27 January 2024 rise by just 1.2%, a plunge from the year-on-year growth of 4.2% seen in the same month in 2023.

Overall non-food sales decreased 1.8% year-on-year over the three months to January 2024, against growth of 2.9% in January 2023.

This was steeper than the 12-month average decline of 0.5%, according to the latest data from BRC-KPMG Retail Sales Monitor.

Over the three months to January 2024, in-store non-food sales fell 1.5% year-on-year, compared to growth of 7.2% in January 2023.

Additionally, online non-food sales decreased 4.2% year-on-year in January 2024, against a decline of 4.1% in January 2023.

Helen Dickinson, CEO of the British Retail Consortium, said: "Easing inflation and weak consumer demand led retail sales growth to slow. While the January sales helped to boost spending in the first two weeks, this did not sustain throughout the month.

"The milder temperatures meant clothing sales performed poorly, particularly winter clothing and footwear. It was better news for health and beauty products, which continued to sell extremely well.

"With the Spring Budget in sight, and a general election looming, the Government cannot afford to ignore the needs of retailers and their customers. Employing three million people and supporting families and communities in every corner of the country, retail is the ‘everywhere economy’. By addressing the cumulative burdens, from business rates’ rises to ill conceived new recycling proposals to border control costs, the next Government can unlock retail investment and boost local and national economic growth."

Linda Ellett, UK Head of Consumer Markets, Leisure & Retail at KPMG, added: "It may be a new year, but the hangover of low consumer confidence remains, with retail sales growing by a lacklustre 1.7% on the high street, and online operators seeing yet another month of negative sales performance.

"Health and beauty purchasing continued to drive sales both on the high street and online, whilst sun seekers and consumers with healthy resolutions front of mind, gave a boost to sports and travel equipment sales, which were up over 4% year on year.

"The extraordinary weather conditions across large parts of the country did little to encourage shoppers out on to the high street, whilst continued industrial action on the rail network was unhelpful for city centre locations. Whilst there are some positive signs that mortgage rates are starting to fall and stabilise, and shop inflation has fallen to its lowest level in over a year, the feel good factor has yet to materialise at the tills.

"Retailers will be hoping that continued good news on the economy, coupled with the small boost given to some consumers as cuts in national insurance start to feed through to pay packets, will boost confidence and convert to sales. With increases in labour costs and business rates around the corner, retailers will be hoping for good news in the Chancellors’ upcoming Budget to give consumers that lift they need to start spending again."