Jan 23 (Reuters) - British retail sales rose unexpectedly last month, helped by strong online sales, according to data published on Friday which added to signs of a pickup in the economy after finance minister Rachel Reeves' budget.

Sales volumes rose by 0.4% in December from November, the Office for National Statistics said, marking a brighter end to an otherwise drab quarter for shops.

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Economists polled by Reuters had expected sales to fall by 0.1% in month-on-month terms.

Earlier on Friday, market research firm GfK said consumer confidence rose to its highest level since August 2024 as households became more positive about their own finances.

For the fourth quarter as a whole, retail sales fell by 0.3%, reflecting declines in November and October, which the ONS said would exert a 0.01 percentage-point drag on overall economic output.

"Non-store retailers rebounded, with online jewellers confirming renewed demand for precious metals, following a lull in November 2025," the ONS said.

Compared with December a year ago, retail sales volumes were 2.5% higher, marking the strongest such reading since April.

Still, overall retail sales volumes remained 2.2% lower last month than their level six years ago, before the COVID-19 pandemic.

Major British retailers were generally cautious about 2026 prospects in their post-Christmas trading updates.

Food retail leader Tesco (TSCO.L) , opens new tab outperformed the wider market but Marks & Spencer (MKS.L) , opens new tab disappointed with its clothing sales and Primark owner Associated British Foods (ABF.L) , opens new tab warned on profit. Fashion retailer Next(NXT.L) , opens new tab and electricals group Currys(CURY.L) , opens new tab raised profit outlooks.

https://www.reuters.com/world/uk/uk-retail-sales-show-unexpected-increase-december-2026-01-23/