Cash-strapped In contrast to eating out and ordering takeout last month, British consumers purchased at sales and grocery stores, which unexpectedly increased retail sales, according to government figures released on Friday.
According to the Office for National Statistics, British retail sales surprisingly increased by 1.2% in February compared to the previous month, bringing volume back to pre-pandemic levels.
Retail sales volumes were expected to increase by 0.2% in February compared to January, according to economists surveyed by Reuters. Also, January’s sales growth was increased from 0.5% to 0.9%.
“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 statistician Darren Morgan said.
British consumers are feeling the pinch from inflation, which in October reached a 41-year high of 11.1% and has been in double digits ever since.
The Bank of England stated on Thursday that it anticipated inflation to decline more quickly than anticipated over the upcoming months as a result of decreased energy costs and the government’s decision to extend subsidies in last week’s budget.
The data released on Friday nonetheless revealed that retail sales volumes in February were 3.5% lower than they had been a year earlier.
Despite official numbers on Wednesday showing an 18% jump in food and drink prices in the year to February, the largest since 1977, sales volumes at food outlets had taken less of an impact and were down by 2.3% from a year earlier.
“At face value, these data further add to the view that the recent resilience in activity is still holding up. But when households’ finances are under pressure, it is possible that any improvement in retail sales will be just be met by a softening in non-retail spending such as restaurants,” said Ashley Webb, an economist at Capital Economics.
A consumer confidence poll conducted on Friday revealed that although mood was at a one-year high, it was still relatively poor by historical standards. The economy appears to be on course to avoid the recession that was widely predicted at the beginning of the year.
But, even after accounting for these elements, official budget analysts stated last week that Britain was still on track to experience the largest two-year decline in living standards ever recorded, dating back to the 1950s.
The ONS retail sales volume figures are seasonally and inflation-adjusted. The value of retail sales, which measures how much people spend as opposed to the quantity of items purchased, increased 5.5% over the previous year.
(Adapted from Latestly.com)
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