UK consumer spending and retail sales reports for January looked superficially strong on Tuesday but challenges clearly remained last month with higher spending either still lagging inflation or failing to recover the lost ground after falls in the same month a year ago.

It’s worth noting that the data offered by the two report sources — Barclays and the BRC-KPMG — may vary due to different criteria used to compile the figures. But the overall trend picture is similar.

First the regular monthly Barclays report. That looks at general consumer spending on payment cards but also includes retail sales. 

It said credit and debit card spending grew 1.9% year-on-year in January – the highest uplift since March 2024, but lower than the latest CPIH inflation rate of 3.2%.

And despite falling consumer confidence in the UK economy, down five percentage points to 21%, non-essential spending grew 2.7%, led by the resilient performance of entertainment, health & beauty and digital content & subscriptions.

Barclays data showed spending on clothing and department stores declined by 0.7% and 0.2%, respectively, after posting growth in December. This came as 49% of consumers said they’re planning to cut back on non-essential spending, with the majority (55%) of this group limiting impulse purchases, and a similar proportion cutting down on new clothes and accessories (54%).

Some 37% said the colder and wetter weather combined with the dark evenings in January impacted their spending. In addition, 13% reported they opted to do more online shopping from the comfort of the couch. This preference for at-home browsing drove the share of online retail spending (excluding groceries) to a three-year high in the month, at 58%. 

Spending on pharmacy, health & beauty increased 10.7% in January – the strongest growth in almost three years. This came as 19% said they’ve recently been influenced by social media content to make a purchase, rising to 40% for Gen Z. 

Meanwhile, the British Retail Consortium said in its regular BRC-KPMG Retail sales Monitor that specific retail sales in the five weeks from 29 December to 1 February increased by 2.6%. That was against growth of just 1.2% in January 2024.

Non-food sales outperformed with a rise of 2.5% against a decline of 2.8% in January 2024 and in-store non-food sales increased by 2.6% against a decline of 2% this time last year. The same stronger picture could be seen online where non-food sales rose 2.2% having fallen 4.2% 12 moths ago.

But it’s worth noting that in almost all of the above non-food comparisons, the increases in January 2025 didn’t make up for the decreases in January 2024, apart from when it came to sales in physical stores.

It’s also worth noting that the three-month figures for UK retail didn’t look good, confirming that the so-called golden quarter lost some of its lustre this time.

BRC CEO Helen Dickinson said: “January sales kicked off a solid month for retail with stores delivering their strongest growth in almost two years, albeit on a weak comparable. Consumers headed to the shops to refresh their homes for the year ahead, taking advantage of big discounts on furniture, bedding and other home accessories. With growth across nearly all categories, only toys and baby equipment remained in decline. While the bouts of stormy weather put a temporary dampener on demand, sales growth held up well throughout the rest of the month. This was also helped by the earlier start of the reporting period, adding a few more post-Christmas shopping days into the mix.”

And Linda Ellett, UK head of Consumer, Retail & Leisure at KPMG, added: “2025 got off to a welcome start for retailers with much needed sales growth in January.  But viewed over a three-month period that included Christmas and Black Friday, non-food sales have flatlined. Overall, the golden quarter failed to shine.”