Consumer spending in the UK saw its fastest growth in nearly two years last month, providing a much-needed boost to economic sentiment, according to two key industry surveys.
The British Retail Consortium (BRC) reported that retail sales increased by 2.6 per cent year-on-year in January, doubling the 1.2 per cent growth recorded in the same month last year. Meanwhile, Barclaycard data showed a 1.9 per cent rise in credit and debit card spending over the same period—the highest since March 2024—though it remained below the 2.5 per cent inflation rate.
Encouragingly, discretionary spending surged by 2.7 per cent, suggesting consumers are beginning to loosen their purse strings after sustained wage growth. Despite this, household savings rates remain above pre-pandemic levels, indicating some lingering caution.
Food sales, which had surged by 6.1 per cent in January 2023, grew at a much slower rate of 2.8 per cent this year, while spending on home goods, health and beauty products, and digital subscriptions helped drive overall retail performance.
The rise in consumer spending comes amid growing economic uncertainty. Last week, the Bank of England cut its 2025 GDP growth forecast from 1.5 per cent to just 0.75 per cent and reduced interest rates to 4.5 per cent in a bid to support the economy.
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