Retail sales, the UK picks Up Again: January marks the strongest jump in 20 months

The start of 2026 brings an encouraging signal for the British economy. In January, retail sales in the United Kingdom rose by 1.8% compared with the previous month, the strongest increase in the past twenty months. The figure, released by the Office for National Statistics, far exceeded economists’ expectations, which had pointed to a more modest 0.2% rise. It also marks the first consecutive increase after six months of uneven performance.

The result was driven primarily by fuel sales, but more niche sectors such as art and antiques also posted strong performances. Online jewellers continued to show solid figures, while non-store retailing – which includes e-commerce – expanded by 3.4% month on month. According to some analysts, wet weather may have encouraged online purchases, further supporting the digital channel.

The rebound in consumer spending offers a breath of fresh air for the Labour government, which is working to revive the economy after a 2025 marked by fears of tax increases, slowing wage growth and uncertainty in the labour market. Households, however, appear to have absorbed without immediate setbacks the effects of the budget introduced in November by Chancellor of the Exchequer Rachel Reeves, also thanks to the postponement of several tax hikes.

Falling inflation and recent interest rate cuts have also helped support consumer confidence. Economists remain cautious, however: employment growth appears weak and slowing wage dynamics could limit households’ ability to sustain this pace of spending over time. The signal is positive, but the recovery will need to consolidate in the coming months if it is to prove truly structural.

Andrea Pelucchi