Could strong retail sales be just what U.K. needs as it trips into recession?

Now, as the country processes the disappointing economic results, a piece of uplifting data has popped up. The U.K.’s retail sales saw a surprise boost—its biggest bump in nearly three years—by 3.4% in January, as consumers’ spending appetite remained strong, the Office of National Statistics said Friday. 

That’s also the steepest jump in retail spending since at least 1996, excluding the COVID-19 spike, and is a welcome reversal from December’s 3.2% slump in sales numbers. Part of the reason why December sales were down sharply was because budget-constrained shoppers moved up their holiday splurge to November to cash in on Black Friday deals. 

“Overall, today’s release was stronger than expected and suggests the drag from higher interest rates on consumer spending is fading fast and points to the economy soon moving out of recession,” Joe Maher, an economist at Capital Economics said, according to Reuters.

Maher added that the retail sales rise could in fact possibly cut short the recession that the U.K. just slipped into.  

On the surface, the strong retail sales is great news. It points to an upward trajectory—an expansion, rather than contraction, in consumer demand.

But experts are treading with more caution on what this data is really saying.

‘Pinch of salt,’ please

The surge in retail sales volume in January now brings it back to November 2023 levels, but that’s still 1.3% below pre-pandemic levels, according to ONS. 

“After the precipitous decline in retail sales we saw in December as shoppers brought forward some of their Christmas spending into November’s Black Friday sales period, but also played it ‘safe’ with smaller family gatherings, January’s recovered sharply,” Lisa Hooker, PwC’s industry for consumer markets lead, said in a note. But she…