The latest retail sales figures from the Office for National Statistics (ONS) shows continued growth for the twelfth consecutive three month period making it the longest period of sustained growth since November 2007.
On a year on year basis the quantity bought in February 2014 3.7 percent when compared to February 2013 says the ONS. On a monthly basis the quantity bought increased by 1.7 percent.
Store prices also deflated over the year from February 2013 to February 2014 by 0.2 percent led by fuel, which saw the greatest price drop of 4.4 percent. The last time deflation was seen was back in September 2009.
Online sales still continue to gather pace with the amount spent increasing by 12.4 percent between February 2013 and February 2014 and by 2.5 percent over the month compared to january 2014.
Martin Beck senior economic adviser to the EY ITEM Club, commented:
“Retail sales surged ahead in February, in defiance of market expectations for a lacklustre performance. On a three month-on three month basis, sales volumes grew at their fastest rate since early 2008. The weather may well have influenced the numbers – online and mail order sales rose by almost 8% on January’s level, perhaps driven by those unwilling to brave the elements.
“February’s strong reading is consistent with other positive evidence from the retail sector. The reported sales balance in March’s CBI’s Distributive Trades Survey fell back from a high level, but this still showed sales growth in positive territory. And the survey’s look at future performance suggests the expected sales balance will increase.
“Meanwhile, inflation fell in February to its lowest level in four years and looks set to continue in that direction, ensuring shoppers’ purchasing power receives less of a drag from rising prices.
“With growing employment and rising house prices boosting the ‘feel-good’ factor among consumers, the foundations for a continued recovery in retail spending continue to look solid.”
Caxton FX analyst Sasha Nugent said:
“Sterling has rallied considerably this morning based on the UK retail sales impressive figure of 1.7%, up from last month’s -2%. Last month’s release actually stated a decline of -1.5% in retail sales, which was revised this morning to -2.0%, making today’s figure of 1.7% increase all the more potent in the market.
"Sterling is advancing against most of its major counterparts upon the breaking of this news, against the EUR we are seeing 3 week highs and against the US dollar we have seen the rate break through the 1.66 ceiling.”