UK retail sales bounce as shoppers flock to January sales

British retail sales rebounded strongly in January as clothing discounts attracted shoppers, bucking a slowing trend of consumer spending ahead of Brexit, due at the end of March.

Retail sales volumes rose 1.0 percent in January alone after their biggest fall in December in a year-and-a-half, the Office for National Statistics (ONS) said, far above the consensus forecast in a Reuters poll of economists for a 0.2 percent rise.

Compared with a year ago, retail sales were 4.2 percent higher in January, the biggest annual rise since December 2016 and again outstripping almost all forecasts in the poll that pointed to a reading of 3.4 percent.

"Clothing stores saw strong sales, luring consumers with price reductions, with food sales also growing after a slight dip after Christmas," ONS statistician Rhian Murphy said.

Britain's economy slowed sharply in the last few months of 2018 but Friday's data suggested that consumer spending remains resilient, even if other parts of the economy like manufacturing are struggling ahead of Britain's departure from the European Union.

Brexit is due on March 29 but there is no clarity yet on whether Britain can leave with a transition deal, something that has hammered business investment.

Looking at the three months to January compared with a year ago, which smooths out some monthly volatility, retail sales growth picked up to a six-month high of 3.5 percent from 2.9 percent in December.

Clothing sales on this measure grew by the largest volume since September 2017.

Friday's data chimed with other signs that consumer spending may have recovered partially from a slowdown late last year, when households tightened their belts after splashing out during a hot summer and the soccer World Cup.

A recent survey from the British Retail Consortium showed shops enjoyed the fastest sales growth in seven months -- a bit of relief after their worst Christmas in a decade.

There has also been some comfort for consumers in recent data which has shown the fastest growth in underlying pay since 2008 and inflation falling to a two-year low of 1.8 percent.

The measure of inflation used in the retail sales data showed a 0.4 percent annual increase in January, the smallest rise since November 2016.
Clothing prices fell by the most since August 2016.