The latest figures from the ONS show that retail sales rose in the three months to January 2026, with the figures for this month showing a 1.8 per cent increase, the largest since May 2024.
The growth is partly due to a rise in sales of artwork, antiques and jewellery.
Commenting on the figures, Phil Monkhouse, UK Country Manager at global financial services firm Ebury, said: “The New Year got off to a strong start for retailers, as January registered a 1.8% uptick in sales, suggesting that consumers were willing to open the purse strings and hit the January sales after a quieter autumn.
“The sharp drop in the latest inflation print and the growing consensus that the Bank of England will slash rates again in March, should ease pressure on household finances. Lower borrowing costs and improving real incomes will likely lift consumer confidence and spending, resulting in stronger retail activity in the upcoming months.
“However, while momentum appears to be returning, sales volumes remain flat on pre-pandemic levels, and retailers are continuing to grapple with intensifying financial strain. Rising employment costs, uneven consumer spending, and ongoing uncertainty driven by weak economic growth and geopolitical tensions are all weighing heavily on the sector.
“In this environment, businesses should be as prepared as possible – prioritising robust FX risk management and securing access to flexible finance to help weather any headwinds in this unpredictable trading landscape.”
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