Retail sales grew by a better than expected 0.8% in February but the figures failed to lift the gloom surrounding the high street.
The update from Office for National Statistics (ONS) follows a bleak day for the sector on Wednesday as a series of chains reported tough trading amid a squeeze on household incomes.
February’s performance was better than the 0.4% growth pencilled in by the City but the ONS also revised down January data to show sales shrank by 0.2%.
ONS senior statistician Rhian Murphy said: “Retail sales did grow in February, with increases seen in food, non-store and fuel, but this followed two months of decline in these sectors.”
She said the overall picture was one of falling sales, mainly due to declines across the board in December.
Supermarkets drove sales growth last month, as well as vehicle fuel and online shopping, though non-food retailers – which include department stores and clothes shops – suffered a decline.
Analysts noted that the data only covered the period up to 24 February, before major weather disruption that a number of retailers have already said disrupted trading.
Ben Brettell, senior economist at Hargreaves Lansdown, said: “The champagne remains on ice for now.
“The monthly numbers are always volatile, and the underlying trend is still one of weakness.
“There’s also a risk of further disappointment in March, with the Beast from the East bringing economic disruption and keeping consumers at home.”
Retailers have been under pressure in recent months as wage growth lags behind inflation, resulting in a squeeze on spending power.
Recent weeks have seen the collapse of Toys R Us and Maplin while Wednesday saw Carpetright unveil a rescue plan that could see a quarter of its stores close, as well as a profit warning from Moss Bros and B&Q reporting a downturn in demand for big-ticket items.
Latest official figures suggest that the squeeze on consumers could be coming to an end, though curbs on public spending and interest rate hikes could continue to weigh on them.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Looking ahead, retail sales should begin to pick up over the coming quarters as inflation falls below nominal wage growth, but growth will remain sub-par due to the ongoing fiscal squeeze and rising mortgage rates.”
From – SkyNews
