By David Milliken

British Retailers Start 2025 Strong Despite Challenges

LONDON (Reuters) – British retailers have reported a reasonable start to 2025 following a disappointing 2024; however, concerns linger about rising employment costs in April and broader inflation pressures, according to a trade body on Tuesday.

The British Retail Consortium (BRC) noted that January retail spending was 2.6% higher than a year earlier, significantly above the average growth of 0.8% over the past 12 months.

Additionally, Barclays reported a 1.9% increase in January consumer spending year-on-year—marking the best performance since March—despite a decline in consumer sentiment to its lowest since April.

Helen Dickinson, BRC chief executive, commented, “January sales kicked off a solid month for retail. While the bouts of stormy weather put a temporary dampener on demand, sales growth held up well throughout the rest of the month.”

However, Dickinson highlighted that retailers would face 7 billion pounds ($8.7 billion) in additional costs later in the year, stemming from increased employer social security contributions, a higher minimum wage, and a new packaging levy.

“Many businesses will be left with little choice but to increase prices and cut investment in jobs and stores,” she added.

Major retailers in Britain, including Tesco, Next, and Marks & Spencer, have indicated a challenging year ahead as employer tax increases potentially affect prices and employment levels.

Official data revealed that retail spending, excluding automotive fuel, increased by 1.3% year-on-year in the last quarter of 2024, but the volume of goods sold dropped by 2.0% after inflation adjustments.

Sainsbury‘s, the second-largest supermarket chain in Britain, announced plans to cut over 3,000 roles to navigate a “particularly challenging cost environment.”

Last week, the Bank of England forecasted that consumer price inflation could rise to around 3.7% by mid-year, up from 2.5% in December, alongside predictions of higher unemployment.

The BRC’s January figure was partly boosted by a weak reading from a year earlier and reflected a decline from December’s 3.1%, which was artificially inflated by Black Friday trends in 2024 compared to 2023.

($1 = 0.8079 pounds)