Retail sales in Britain rose unexpectedly in February driven by a strong performance by department store discounters. File photo by Hugo Philpott/UPI | License Photo
March 24 (UPI) -- British retail sales posted a surprise gain last month jumping 1.2% on increased spending in high street and shopping mall discounters, the country's main statistical agency said Friday.
Non-food sales surged 2.4% compared with January driven by a strong performance by discount department stores, but the broader picture remained weak with sales falling throughout 2022 amid a cost of living crisis leaving volumes far below their level in February last year, Office for National Statistics figures show.
February's increase followed a rise of 0.9% in January, revised sharply higher from the 0.5% original estimate, but the performance means sales volumes in the three months to February still dropped by 0.3% compared with the previous three months. Sales volumes were 3.5% lower than in February 2022.
By volume, the quantity purchased, sales are now back to where they were in February 2020, just before the COVID-pandemic shuttered Britain's economy.
"In the latest month, discount department stores performed strongly with food shops also doing well as consumers, confronted with cost-of-living pressures, cut back on eating out or purchasing takeaways," ONS economic statistics director Darren Morgan said in a statement.
"However, the broader picture remains more subdued, with retail sales showing little real growth, particularly over the last eighteen months with price rises hitting consumer spending power."
Automotive fuel sales volumes fell by 1.1% in February, a rise in January when widespread industrial action by railway workers may have forced train passengers onto the roads, causing a transient surge in demand for gasoline and diesel.
ONS said food store sales volumes rose sharply, increasing by 0.9% in February from a 0.1% rise in January, with some anecdotal evidence of reduced spending in restaurants and on takeaways because of cost-of-living pressures.
Online sales growth slowed to 0.2% in February after surging 2.9% in January.
The retail report comes one day after the Bank of England raised interest rates by another 25 basis points to 4.25% after 10 previous hikes appeared to have been ineffective in taming runaway consumer price inflation which this week rebounded to 10.4%.
Nevertheless, the bank said inflation would fall sharply this year and urged businesses not to derail its path by raising prices unnecessarily.
Andrew Bailey, governor of the Bank of England, warned that "if all prices try to beat inflation we will get higher inflation."
"I would say to people who are setting prices -- please understand, if we get inflation embedded, interest rates will have to go up further and higher inflation really benefits nobody," Bailey said. "It hurts people and it particularly hurts the least well-off in society."