UK retail sales started 2026 on a strong footing, with January marking the fastest growth since August as food spending and in-store activity rebounded.
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Summary:
UK retailers reported their strongest sales growth since August, pointing to a solid start to 2026.
January gains were driven by food spending and a rebound in in-store activity.
Like-for-like sales also strengthened, suggesting improved underlying demand rather than store expansion effects.
The data adds to tentative signs that consumer sentiment has stabilised following the government’s November budget.
Analysts caution that the outlook still hinges on inflation, wage growth and interest-rate expectations.
UK retailers reported a notably stronger start to 2026, with January sales data pointing to a pickup in consumer spending momentum after a subdued second half of last year.
According to figures from the British Retail Consortium, total retail sales rose 2.7% year-on-year in January, more than double December’s pace and the strongest increase since August. Like-for-like sales, which adjust for store openings and closures, climbed 2.3%, also marking the best performance in several months and suggesting a genuine improvement in underlying demand.
Food spending was the main driver of the rebound. Analysts note that food sales grew at a robust pace, reflecting both higher volumes and sustained price pressures, while non-food categories also returned to positive territory. The strongest growth was recorded around the turn of the year, as shoppers responded to post-holiday promotions and January sales events.
A notable feature of the January data was the improvement in physical retail. In-store sales increased at their fastest pace in six months, indicating that footfall has begun to recover after a prolonged period of weakness. Analysts say this shift may reflect easing pressure on household budgets, as well as increased consumer confidence heading into the new year.
The upbeat retail figures add to emerging evidence that sentiment has stabilised following the government’s autumn budget. Official data released in late January also showed a stronger-than-expected rise in retail sales in December, reinforcing the view that household spending held up better than feared through the year-end period.
That said, analysts remain cautious about extrapolating too much from a single month of data. While January’s performance suggests consumers are becoming more willing to spend, the outlook for discretionary demand remains sensitive to inflation trends, wage growth and the path of interest rates. Elevated borrowing costs and lingering cost-of-living pressures continue to constrain household finances, particularly for non-essential purchases.
Overall, analysts see the January rebound as an encouraging signal for the retail sector, but stress that sustained improvement will require continued progress on inflation and real income growth over the course of 2026.
Something to print out and stick on the fridge door!
This article was written by Eamonn Sheridan at investinglive.com.