Tesco share price was trading slightly higher on Friday as traders embraced a spike in retail sales in January. At the time of writing, the TSCO stock was trading slightly higher at 250.8p. The stock has been trading sideways for the past few days amid economic concerns in the UK.

Economic Outlook

Tesco share price has been under intense pressure for the past few days amid looming recession fears in the United Kingdom. However, despite the ongoing crisis, the British retail trader has been among the best-performing stocks in the retail sector. Tesco’s shares have climbed more than 11% in the year to date.

Data released by the Office for National Statistics (ONS) earlier last week showed that the headline and core Consumer Prices in the UK declined in January. Despite the slip, the country’s inflation rate still hovers around its highest level in three decades.

As such, a higher inflation rate calls for a hike in interest rates by the Bank of England, which is bad for stocks like Tesco. Most retailers, such as Tesco, tend to underperform amidst higher interest rates. BoE recently hiked its interest rates by 0.50% points in a bid to battle the uncomfortably high inflation.

Tesco’s shares barely reacted to the UK’s retail sales data released on Friday. Data by the ONS shows that retail sales volumes increased by 0.5% in January, following a 1.2% fall in December. Even so, sales volumes remain 1.4% below their pre-pandemic levels.

Tesco Share Price Forecast

The daily chart shows that Tesco share price has been trading sideways for the past few days. Along the way, the stock has managed to move slightly above the 25-day and 50-day moving averages. Its Relative Strength Index (RSI) has moved slightly higher but remains in the neutral zone.

Therefore, with the improvement in the retail sales volumes, I expect the TSCO stock price to continue moving higher in the medium term.  If this happens, buyers will be targeting the next resistance level of 262p.