UK’s retail sales in February grew three times faster than the economists had forecasted as food and internet sales climbed, as the economic growth continued in the first quarter.
The Office for National Statistics said on Thursday that retail sales, including auto fuel, rose 1.7 percent in February, up from a revised decline of 2 percent in January. This exceeded the average estimate of 0.5 percent in a Bloomberg poll of 20 economists.
Rising employment and improving housing market is driving UK’s recovery. The Bank of England predicted in February that household-spending will grow at least 3 percent in 2014.
“Consumers are still loosening their purse strings,” Samuel Tombs, a London-based economist at Capital Economics Ltd told Bloomberg. “The figures provide some reassurance that the economic recovery has not lost pace in the first quarter.”
Food sales grew 2.1 percent from the previous month, accounting for nearly half the monthly growth in retail sales. Auto fuel sales rose 0.9 percent; while Internet and mail order sales surged 7.9 percent, contributing to a quarter of the total monthly growth.
Sales of clothing fell 0.1 percent, while expenditure on household items plunged 1.1 percent. Sales in “other stores”, such as pharmacies, grew 2.9 percent.
The news sent the Sterling 0.2 percent higher against the dollar to $1.6622 as of 10.08 a.m. in London. The pound also gained 0.5 percent versus the euro to 82.70 pence per euro. Yields on 10-year gilts remain slightly unchanged at 2.69 percent.
The ONS further added that the wettest winter in nearly 3 centuries had almost insignificant effect on retail sales. The retail sales surged 3.7 percent from a year earlier, while the mean price of an item sold plunged 0.2 percent, the first time to do so since September 2009. The decline was attributed to auto fuel discounts, which saw prices drop 4.4 percent.
To contact the reporter of this story; Jonathan Millet at email@example.com