Retail sales in the UK rose by 0.9% year-on-year in February 2025, a sharp slowdown from January’s 2.5% gain and well below the expected 2.4% increase.
UK retail sales growth slows more than expected
The data underscores the continued strain on consumer spending amid the ongoing cost-of-living crisis, as many households face rising bills, higher energy costs, and inflationary pressures. This has prompted consumers to cut back on discretionary spending, leading to a more cautious approach in their purchasing habits.
Non-food sales showed no growth compared to February 2024, highlighting the ongoing weakness in sectors such as clothing, electronics, and home goods. Food sales, however, saw a modest 2.3% increase, down from the 5.6% growth recorded a year ago. This slowdown in food sales growth reflects a broader trend of consumers tightening their belts, opting for more budget-conscious choices and reducing non-essential spending. Despite this, grocery retailers have managed to maintain some resilience due to the steady demand for basic food items amidst economic uncertainty.
Valentine’s Day-driven impulse spending provided a temporary boost
However, Valentine’s Day-driven impulse spending provided a temporary boost for retailers, with certain categories benefiting from the uptick in consumer activity, despite the overall cautious sentiment. Helen Dickinson, Chief Executive of the British Retail Consortium, noted that while sales growth across non-food categories remained subdued, online purchases—particularly in computing and electronics—helped support the sector. Consumers appeared more willing to spend on gadgets, appliances, and technology items, likely driven by a combination of sales promotions and a growing reliance on online shopping. Additionally, jewellery, watches, and fragrances saw a strong performance thanks to Valentine’s Day, reversing last year’s declines, while furniture also returned to growth as people continued to invest in home improvements.
UK consumers face several economic challenges
The mixed retail performance reflects the broader economic challenges facing UK consumers. While there are pockets of strength in certain sectors, such as online shopping and Valentine’s Day-related products, the overall retail landscape remains subdued. Retailers will likely continue to face pressures in the coming months as inflation persists and consumer confidence remains fragile. Going forward, businesses may need to adapt to changing consumer behaviors, focusing on value offerings, online convenience, and targeted promotions to capture spending in a challenging economic environment.
