UK retail sales rebound stronger than expected in Feb, outlook remains weak

U.K. retail sales beat expectations in February, rose by 1.4 percent m/m after a downwardly-revised 0.5 percent dip in the previous month, data published by Office for National Statistics showed on Thursday. Data suggested UK consumers took Brexit and rising inflation in their stride. 

Some rebound in today’s report was expected after the three back-to-back declines in the previous months. But today's reading was better than a 0.4 percent gain predicted by economists. In the three months to February, sales volumes fell by 1.4 percent, a sharper slide than the 0.5 percent decline for the three months to January.

Gains were seen across the board in February, with household goods rising 3.7 percent and clothing growing 1 percent. Sales were up 3.7 percent from a year earlier. Excluding auto fuel sales, they gained 1.3 percent on the month. Fuel prices in February were 18.7 percent higher than a year earlier.

"The underlying trend suggests that rising petrol prices, in particular, have had a negative effect on the overall quantity of goods bought over the last three months," said ONS statistician Kate Davies.

"Looking ahead, the hurdle to consumer-led growth keeps rising as increasing price pressures sap purchasing power. With the coming months set to reflect the further up creep in costs from sterling’s substantial post-referendum depreciation, the MPC will remain on watch for signs of decelerating consumer momentum," said Lloyds Bank in a report.