British retail sales rose slightly more than expected last month but January's huge decline was even sharper than previously reported, official figures showed.
The Office for National Statistics said sales rose 0.5 per cent in February versus analysts' forecasts for an increase of 0.4 per cent. That brought the annual rate up to 2.1 per cent, as expected.
Sales in January, however, are now seen as having fallen by 1.6 per cent instead of the 1.3 per cent fall originally reported.
The ONS said the underlying rate of retail sales growth slowed further in February, contrasting with faster growth at the end of last year, as the quarterly rate slowed to 0.5 per cent from 1.3 per cent, its weakest in five months.
Bank of England policymakers are counting on a pick-up in consumer spending to drive economic growth this year but the latest figures suggest that recovery is far from assured after a sharp retail slowdown through most of 2005.
"Despite growing signs of stabilisation in the housing market, the consumer's appetite for spending remains weak. On the back of yesterday's poor jobs data, markets may tend to focus on the weakness apparent in this report," said Gavin Redknap, economist at Standard Chartered.
Interest rate futures erased losses made on a strong housing market report from the Royal Institution of Chartered Surveyors overnight which showed prices rising at their fastest rate since June 2004.
The ONS said textiles, clothing and footwear sales jumped 3.0 per cent in February but the big monthly increase reflected very weak outturns for the previous two months and simply brought sales activity back to normal levels.
Fashion chain French Connection posted a sharp fall in profits this week. Households goods stores have also been having a tough time with sales falling 1.1 per cent in February.
Flooring specialist Floors 2 Go also reported a big drop in profits this week and MFI Furniture Group said last month it was cutting more than 1,000 jobs after poor sales wiped out profits in 2005.
The ONS said that overall prices were on average 1.1 per cent lower than a year earlier but this assumption was based on old data as the February inflation numbers were not out yet.
This increased the possibility of the latest numbers being revised even more than normal.