Strong January comes as pay rises finally start to outpace inflation.

Retail sales have risen for four out of the past five months, including an unexpected surge of 0.9% in January, the UK Office of National Statistics has reported.

Since September last year, sales have risen month-on-month by +0.7%, +0.7%, -0.1%, +0.6% and +0.9%. After a rocky first half to 2011, retail sales are now 2% up on 12 months ago.


Store price inflation store price inflation, slowed in January 2012 to 2.2% at an annual rate, falling from 2.5% in December 2011, reinforcing the Bank of England’s view that inflation has been tamed.

It is expected that salaries will increase ahead of inflation this year, leading to real rises in spending power among British households.

The British Retail Consortium, while welcoming the better-than-expected figures, struck a cautious note for the remainder of the year.

"These numbers are slightly better than we would have expected but make it clear that price-cutting by retailers is what’s driving any growth in business. Discounting is biting into retailers’ margins with non-food businesses facing particularly tough times,” said Stephen Robertson, BRC director general.

Incongruously, while pouring water on the tide of good news from the retail sector, Robertson sought to blame the government for dampening optimism.

"We are looking to the Government for steps to inspire confidence in business. Our pre-Budget research shows economic uncertainty is putting retailers off expanding their operations,” he said.

Non-store retailing was the fastest growing sector with a surge of 13.3%. Jewellery is not separately recorded, but the closest discretionary spending category, textile, clothing and footwear was up 0.5% over December, and ‘other stores’ was up 3.4%.

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