UK retail sales jump in February

Sales volumes compared with January increased at three times the pace expected in a Reuters poll, pushing up the pound. On a less volatile measure, over the three months to February they rose at their strongest pace since August last year.

Consumers, many of them buoyed by a strengthening housing market, have been the driving force behind Britain’s rapid economic recovery even as household income has been squeezed by slow wage growth and high inflation in recent years.

That strain on consumers could begin to ease off soon, with inflation now trending below the Bank of England’s two per cent target and wage growth beginning to pick up.

“The UK consumer is powering on, helped by improving pay growth, subsiding inflation and very low interest rates. Even the rain during February did not appear to dampen spirits on the high street,” Rob Wood chief UK economist at Berenberg said. However, Alan Clarke, economist at Scotiabank, said it was hard to see how this pace of growth could be maintained. “After all, real income growth has only just turned positive,” he said.

Retail sales volumes rose 1.7 per cent on the month — bouncing back from a two per cent fall in January — to show 3.7 per cent growth on the year, the Office of National Statistics said. Economists had expected retail sales to edge up 0.5 per cent on the month and to be 2.5 per cent higher on the year.

Sales were 1.6 per cent higher in the three months to the end of February compared with the previous three-month period, the ONS said. That was its highest since August last year.

The growth in retail volumes was led by food stores which contributed more than a half of the growth in retail sales.