British retail sales unexpectedly surged in February due to strong food sales and despite less discounting, official data showed today, indicating consumers are still weathering the global credit storm.
The Office for National Statistics said sales grew 1.0 per cent last month, putting them up 5.5 per cent on the year. Analysts had expected a decline of 0.2 per cent on the month and an annual growth rate of 3.6 percent.
The ONS also revised up its figures for January.
Sterling rose after the data which suggests consumer spending is holding up despite growing concerns about the impact of the credit crunch on economic growth.
"February's surprising sharp jump in retail sales, if taken at face value, suggests that a consumer slowdown hasn't even begun yet," said Vicky Redwood, an economist at Capital Economics.
"It's hard to see what is keeping consumers spending. Yet these figures suggest that they certainly are, boosting the chances that the Bank of England's Monetary Policy Committee will hold on to May before cutting (interest) rates again."
The surge was driven by a strong performance in food stores, the ONS said, where sales grew at their fastest pace since mid-2006.
There was also less severe price cutting on the high street in February, with an implied deflator measure of -0.3 percent, up from -0.8 per cent in January.
The value of retail sales was 6.6 percent higher than the same month a year ago at £4.9 billion, the ONS said.
Separately, ONS data showed public sector borrowing was higher than expected in February.
Public sector net borrowing was 2.67 billion and the public sector net cash requirement was 2.897 billion - both the biggest for a February in more than a decade.