UK retail sales defied doom forecasts in February according to ONS report

UK retail sales declined less than expected in February, official figures released by the Office for National Statistics (ONS) on Thursday 24 March showed. According to the ONS, the volume of retail sales fell 0.4% month-on-month in February, compared with a 2.3% gain in the previous month and analysts' expectations for a 1% decline, while the quantity bought in the retail industry rose 3.8% year-on-year last month, recording growth for the 34th consecutive month.

Average store prices, including petrol stations, fell by 2.5% in February 2016 compared with January 2015, the 20th consecutive month of year-on-year price falls, while the amount spent in the retail industry rose 1.4% year-on-year in January and 1.3% month-on-month.

Online sales remained strong in February, with the value of goods bought online increasing by 12.3% year-on-year in February 2016. On a month-on-month basis, however, online sales decreased by 1%.

The ONS added all store types, except textile, clothing and footwear stores showed increases in the quantity bought compared with February 2015, while all stores except textile, clothing and footwear stores and petrol stations showed increases in the amount spent year-on-year.

However, average store price compared with February 2015 fell across all kinds of stores last month.

"It's hard to see how the recovery in consumer spending can maintain its current momentum," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

"The tighter fiscal squeeze, the recent moderation of firms' hiring plans and the looming pick-up in inflation all suggest that the spending recovery will lose its vim this year. We expect year-over-year growth in real household spending to ease to about 2.5% this year, from 3% in 2015."