British retail sales increased by 1.8% in January from December, more than expected and the biggest rise since May 2024,

Rajeev Shaunak, head of consumer at MHA, comments on today’s ONS retail sales:

“The UK retail sector has kicked off 2026 with a surprising display of resilience, building on a late surge of momentum from the end of last year. Following a challenging Autumn, the modest increase in retail sales in December, particularly within online shopping, brought much needed relief to the sector. The increase was driven by consumers resuming purchases they had postponed because of the late Budget announcement. While it wasn’t a bumper Christmas, it was clearly better than many had feared and signalled a vital recovery phase.

“Building on that, the latest ONS retail sales show a continued bounce back, with total sales rising by 1.8% in January. Consumers clearly responded to New Year discounting.

However, the underlying picture remains complex. Inflation cooling to 3% is a significant milestone, and the Consumer Confidence Index edging up to -16 suggests that the easing of price pressures is finally soothing consumer nerves. Yet, even with this improved sentiment, the ‘Golden Quarter’ demonstrated that shoppers are now hyper-sensitive to timing and value.

“For the industry, the pressure is far from over. Rising business costs, including the recent hike in the National Living Wage, mean that while the top line is growing, margins remain under fire. Those businesses able to respond swiftly to shifting demand and maintain the agility seen during the December recovery will be best positioned to weather the ongoing uncertainty and restore genuine cheer to the sector in the months to come.”

Among its UK locations, accountancy and advisory firm MHA has offices in Edinburgh and Aberdeen.

For more information, visit www.mha.co.uk