Surprise UK retail sales rise adds to signs of pickup in economy

[LONDON] British retail sales rose unexpectedly in December, helped by strong online sales, based on data published on Friday (Jan 23) which added to signs of a pickup in the economy after Finance Minister Rachel Reeves’ Budget.

Sales volumes rose by 0.4 per cent in December from November, the Office for National Statistics (ONS) said, marking a brighter end to an otherwise drab quarter for the shops.

Economists polled by Reuters had expected sales to fall by 0.1 per cent month on month.

Earlier on Friday, market research firm GfK said that consumer confidence rose to its highest level since August 2024, as households became more positive about their own finances.

For the fourth quarter as a whole, retail sales fell by 0.3 per cent, reflecting declines in November and October, which the ONS said would exert a 0.01 percentage-point drag on the overall economic output.

“Non-store retailers rebounded, with online jewellers confirming renewed demand for precious metals, following a lull in November 2025,” the ONS added.

Against December a year before, retail sales volumes were 2.5 per cent higher, marking the strongest such reading since April.

Still, overall retail sales volumes remained 2.2 per cent lower in December than their level six years ago, before the Covid-19 pandemic.

Major British retailers were generally cautious about their 2026 prospects in their post-Christmas trading updates.

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Food retail leader Tesco outperformed the wider market, but Marks & Spencer disappointed with its clothing sales and Primark owner Associated British Foods warned on profit. Fashion retailer Next and electricals group Currys raised their profit outlooks. REUTERS