Retailers made a solid start to the year albeit only after a miserable end to 2023. Sales climbed fully 3.4 percent on the month, their steepest rise since April 2021 and more than double the market consensus. However, this was still only just enough to reverse December's sharper revised 3.3 percent slump. Annual growth was minus 0.7 percent, up from minus 2.4 percent and the first positive reading since March 2022 and purchases now match their highest level since last June.

Excluding auto fuel, the picture was much the same with sales rebounding 3.2 percent versus December and increasing also 0.7 percent on the year.

Monthly growth was almost evenly split between the food sector (3.4 percent) and the non-food, ex-auto fuel sector (3.0 percent). Within the latter, non-specialised stores (5.4 percent) and the other stores category (6.2 percent) had a particularly good period after hefty losses in December. Non-store retailing (3.2 percent) also saw strong demand and auto fuel was up some 5.4 percent.

January's surprisingly strong rebound suggests that the recession indicated by yesterday's GDP update could well be mild and probably short-lived. Particularly should the labour market remain tight and the housing market stay resilient, consumer spending ought to hold its own. Today's report lifts the UK RPI to 7 and the RPI-P to a solid 33. Unexpected weakness in prices is helping to keep the former in check but the latter shows overall real economic activity running quite well ahead of expectations. As such, pressure on the BoE MPC for an early cut in Bank Rate has just eased a little.

Retailers had a miserable December, suffering a deep 3.2 percent monthly slump in volume sales. January's rebound is seen at 1.5 percent.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.