The headline sounds promising: "UK Retail Sales grew 1% in February." At first glance, it suggests a glimmer of economic vitality, a sign that consumers are spending, and the economy is on the mend. But dig beneath the surface, and a different story emerges—one where the supposed "growth" is little more than a statistical illusion, propped up by inflation rather than genuine increases in consumer activity. In fact, retail sales volumes today are lower than they were six years ago, exposing the fragility of this narrative. What’s really rising isn’t the quantity of goods sold, but their price—a classic case of inflation masquerading as economic progress.
The Numbers Don’t Lie—But They Can Deceive
According to the Office for National Statistics (ONS), UK retail sales values rose by 1% in February 2025 compared to the previous month. This figure, often trumpeted as evidence of economic recovery, measures the total amount spent in retail, unadjusted for price changes. On paper, it looks like a win: more money is flowing through the tills. But here’s the catch—sales volumes, which track the actual quantity of goods purchased, tell a starkly different tale.
Over the past six years, retail sales volumes have not only failed to keep pace with population growth or economic expectations—they’ve actually declined.
Data from the ONS shows that, when compared to February 2019 (pre-pandemic, pre-Brexit fallout, and pre-inflation surge), sales volumes in 2025 remain lower. In real terms, adjusted for inflation, the quantity of goods Britons are buying has shrunk, even as the cash registers ring up higher totals. The 1% growth in February isn’t a surge in shopping bags leaving stores; it’s a reflection of wallets being stretched thinner by pricier tags.
Inflation: The Silent Puppeteer
The culprit behind this disconnect is inflation, which has been a persistent thorn in the UK’s economic side since the early 2020s. The Consumer Prices Index (CPI) hit 11.1% in October 2022—the highest in 40 years—driven by soaring energy costs, supply chain disruptions, and the fallout from Russia’s invasion of Ukraine. While inflation has since eased, it stood at 2.8% in February 2025, still above the Bank of England’s 2% target. This persistent price pressure means that even modest increases in spending don’t translate to more goods sold—they just mean each item costs more.
Consider a simple example: a £10 basket of groceries in 2019 might now cost £13 due to cumulative inflation. If a shopper buys the same basket in 2025, retail sales value rises by 30%, but the volume—the actual amount of stuff—stays flat. Scale this up across millions of transactions, and you get February’s 1% growth: a hollow victory driven by price hikes, not consumer confidence or economic strength. The ONS itself notes that total retail sales volumes in February 2025 were 3.1% below their pre-pandemic peak in February 2020, underscoring that the UK isn’t buying more—it’s just paying more.
Six Years of Stagnation
Rewind to 2019, a time before COVID-19 upended the world and Brexit redrew trade lines. Retail sales volumes were already plateauing, but they were still higher than today. Fast forward six years, and the picture is grim. Despite the occasional monthly uptick—like February’s—sales volumes have trended downward, battered by a triple whammy of rising costs, stagnant wages, and economic uncertainty.
The Centre for Retail Research reported that 2024 saw a modest 0.7% increase in sales volumes after two years of contraction, yet this still left them 2.5% below pre-COVID levels. Go back further to 2019, and the decline is even more pronounced—closer to 5% when adjusted for inflation and population growth.
This isn’t growth; it’s erosion masked by rising prices. The British Retail Consortium (BRC) highlighted in early 2025 that while total retail sales values for 2024 rose 3.6% year-on-year, this was largely due to food price inflation (8.1% growth), while non-food sales barely budged (-0.1%). Consumers aren’t flocking to stores with renewed vigour—they’re reluctantly shelling out more for less.
The Inflation Trick: A Political and Economic Sleight of Hand
Why does this matter? Because touting retail sales growth as a sign of economic health is a convenient way to paper over deeper problems. Politicians and policymakers can point to a 1% rise and claim progress, sidestepping the reality that living standards are slipping. It’s a sleight of hand that’s been used before—nominal growth (unadjusted for inflation) looks impressive until you realise it’s a mirage. Real growth, measured in volumes and adjusted for price increases, is what sustains jobs, businesses, and household wellbeing. By that metric, the UK is treading water at best.
This inflation-driven fakery isn’t unique to retail. Gross Domestic Product (GDP) figures often face similar scrutiny, where nominal gains are celebrated while real output lags. But retail sales hit closer to home—they’re a direct pulse on consumer behaviour. When volumes fall despite value increases, it signals that people are cutting back, prioritising essentials, and feeling the pinch. The Bank of England’s own forecasts for 2025 predict inflation spiking to 3.7% mid-year due to energy and utility hikes, suggesting this trend isn’t going away soon.
The Real Story: A Struggling High Street
Behind the numbers lies a struggling retail sector. High streets are still reeling from years of closures, with footfall down 2.2% in December 2024 compared to the prior year, per the BRC. Online sales, while still significant at 26.5% of total retail in February 2025, haven’t filled the gap left by shuttered stores. Retailers face rising costs—national insurance hikes, minimum wage increases, and reduced business rate relief in 2025—forcing many to pass these onto consumers or scale back operations. The result? Higher prices, fewer purchases, and a cycle of stagnation dressed up as growth.
Consumers aren’t fooled. Surveys show confidence remains shaky, with 84% of UK shoppers worried about the economy in 2023, a sentiment that lingers into 2025. They’re buying less not because they want to, but because they have to. The 1% sales value bump in February might reflect a temporary boost—perhaps from discounting or seasonal shifts—but it’s not a sign of robust demand. It’s a symptom of an economy where inflation is doing the heavy lifting.
Conclusion: Look Beyond the Headlines
The next time you hear "UK Retail Sales grew 1%," don’t cheer just yet. Peel back the layers, and you’ll see a stark truth: prices are up, not prosperity. Six years ago, Britons bought more with less; today, they’re spending more for less. This isn’t economic growth—it’s inflation wearing a clever disguise. Until sales volumes recover to match or exceed their 2019 levels, claims of retail resurgence are little more than hot air. The UK economy isn’t thriving; it’s surviving, and the difference between those two is everything.
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