High street sales unexpectedly rose last month, their first increase in three months and best performance since May.
Sales in January were up 1.1% compared with last year, according to the British Retail Consortium (BRC).
The BRC/KPMG Retail Sales Monitor showed food sales increased 5.1% on a year ago. Non-food sales were down 1.6%, but the fall was smaller than in recent months.
With house prices also rising in January for the first time in nearly a year, the figures might provide a glimmer of hope for the battered economy.
Increase could be short-lived
But while the BRC said today’s retail figures ‘gave room for optimism’, they cautioned that the rise in January sales could just be a short-lived blip.
The figures were boosted by strong sales in early January, but the growth in sales weakened towards the end of the month.
Helen Dickinson, KPMG head of retail, said: ‘The figures don’t mean consumer confidence has returned.
‘The results are heavily skewed by food prices creeping back up again after the heavy promotional activity in December and by a reasonably strong performance in the first week of the month caused by the continuation of a short-lived pick up in spending immediately after Christmas, which ended by the second week.
‘The outlook for many retailers, and the industry as a whole, remains challenging.’
Online sales up
Non-food internet sales increased by 19% as shopping online continues to be popular.
Sales of electronics and furniture were helped by cut-price offers, but clothing, footwear, homewares and health and beauty remained down on January 2008.
Price increases helped the food and drink sector to its best growth since June, and showed that consumers were still willing to spend in this area.
Stephen Robertson, director-general at the BRC, pointed out that consumer confidence remains low and said the figures indicated there had been some ‘pent-up demand’ as customers had waited until the sales to spend on goods they had intended to buy for months.
‘But the fundamentals haven’t changed. Job fears are mounting. It remains to be seen whether January’s discount driven growth was just a blip,’ he added.
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