UK discretionary retail sales grew by +1.7% year on year in January, well below the rate of inflation, as heavy post-Christmas discounting continued to mask weakness in underlying demand, according to the latest BDO High Street Sales Tracker.

The subdued performance follows a disappointing end to the Golden Quarter, when in-store sales fell by -0.5% in December, highlighting ongoing pressure on both consumer spending and retailer confidence.

January delivered a short-lived uplift for the high street, with in-store sales rising by +4.7% year on year, driven largely by aggressive discounting immediately after Christmas and during the early weeks of the January sales period. However, this uplift wasn’t sustained, with total sales across both physical stores and online channels declining in the final two weeks of the month.

Fashion delivered the strongest in-store performance across core discretionary categories, with sales up +7.6% compared with January last year, while non-store sales also recorded growth of +4.8% year on year.

Despite these gains, January marked the ninth month in the past twelve in which total sales growth failed to keep pace with inflation, underlining the prolonged and challenging trading environment facing the sector.

“As February approaches, retailers are poised to tread carefully amidst an uncertain landscape for both consumers and businesses,” commented Sophie Michael, Head of Retail and Wholesale at BDO.

“In such a climate, encouraging consumers to engage in discretionary spending will require substantial effort and strategic initiatives. Retailers must navigate these turbulent times with innovative approaches to stimulate consumer confidence and spending, while at the same time remaining nimble and agile enough to adapt to changing behaviours and further economic headwinds,” Michael added.