UK retail sales surge in February

British retail sales unexpectedly surged last month driven by a strong performance in food sales and despite less discounting on the high street, the Office for National Statistics said.

The Office for National Statistics said sales grew one per cent last month, putting them up 5.5 per cent on the year. Analysts had expected a decline of 0.2 per cent on the month and an annual rate of 3.6 per cent.

The ONS also revised up its figures for January.

The figures suggest the consumer has yet to be hit hard by the global credit crunch and may raise expectations that the Bank of England may hold off on further rate cuts for the time being.

The surge was driven by a strong performance in food stores, the ONS said, where sales grew at their fastest pace since mid-2006. There was also less discounting on the high street in February, with an implied deflator measure of -0.3 per cent, against -0.8 per cent in January.

Separately, ONS data showed public sector borrowing came in larger than expected last month.

Public sector net borrowing was 2.67 billion and the public sector net cash requirement was 2.897 billion - both the biggest for a February in more than a decade.