Surprise rise in UK retail sales

Consumers appear resilient to the continuing stock market jitters

UK retail sales unexpectedly rose strongly in February, driven by higher food sales at the supermarkets, official figures have shown.

Sales grew 1% last month from January and by 5.5% from February 2007, said the Office for National Statistics.

The figures have surprised analysts, who had expected sales in February to decline 0.2% from January.

The upbeat data may persuade the Bank of England to delay further reductions in interest rates.

Resilient consumers

The Bank of England kept rates on hold in March at 5.25%, following two cuts in recent months, as it aimed to ease fears over the impact of the continuing credit crunch and global financial market turbulence.

February's surprising sharp jump in retail sales, if taken at face value, suggests that a consumer slowdown hasn't even begun yet Vicky Redwood, Capital Economics

A number of analysts had expected the Bank to reduce rates further as early as next month, but with the latest upbeat retail data suggesting UK consumer sentiment remains strong, the central bank may delay.

The Bank itself has already reiterated its need to ease economic pressures with its remit to control inflation.

UK inflation as measured by the government's preferred Consumer Prices Index is currently running at 2.5%, above the 2% target.

"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."