Retail sales in Great Britain rose last month amid a sharp increase in consumers spending at department stores, hardware shops and clothes outlets.
Reflecting a stronger economic backdrop than feared, figures from the Office for National Statistics (ONS) showed sales volumes rose by 1% on the month, although spending at supermarkets fell after a bumper month in January.
City economists had forecast a 0.4% monthly fall amid weak levels of consumer confidence, after the economy came close to stagnation in the second half of last year as households tightened their belts.
The figures will come as a boost for the chancellor, Rachel Reeves, after the government’s independent economic forecaster slashed its growth forecasts for 2025 in half at the spring statement on Wednesday.
The ONS also said on Friday that the UK economy grew by 0.1% in the final quarter of 2024, confirming its initial estimate made in February.
However, it also revised up its growth estimates by 0.1 percentage points for each quarter between the final three months of 2023 and the second quarter of 2024. It now estimates the economy grew by 1.1% in 2024, up from an initial estimate of 0.9% growth.
Thomas Pugh, an economist at the audit firm RSM UK, said: “The upshot is that the economy is in slightly better shape than we thought at the end of last year, and households look to be in a strong financial position.
“But business confidence is still weak, which is reflected in falling business investment. The biggest risk is the uncertainty generated by US trade tariffs, a global trade war would mean another bout of stagflation for the UK, even if we avoid direct tariffs.”
The latest snapshot will come as a boost for many retailers, as businesses brace for a jump in costs in April from an increases in the minimum wage, employer national insurance contributions and business rates.
Industry figures had shown consumer confidence hit an 11-month low in February but shoppers appear to have defied a month of bad weather in February to make the most of discounting across the sector.
Food sales fell back 2% compared with the previous month, as some economists suggested this could have been driven by consumers eating out more. The strongest performing category was household goods stores, where sales rose by 6.8% as customers prepared for the warmer months. Clothes and shoe shops recorded a 2.3% increase in sales.
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Households have generally held on to savings in recent months, rather than spend, amid fragile levels of consumer confidence.
Separate figures from the ONS showed households saved more money as a proportion of their income at the end of 2024 than at any point in nearly 15 years, apart from during the Covid pandemic. The household savings ratio rose to 12% in the fourth quarter of 2024, up from 10.3% in the third quarter.
“We expect retail sales volumes to continue to rise through the rest of 2025 as households wind down their elevated savings levels, supporting future retail sales,” said Elliott Jordan-Doak, a senior UK economist at the consultancy Pantheon Macroeconomics.
“That said, households will have to contend with rising inflation, the potential of stickier interest rates, and the ongoing threat of a global trade war.”
