UK retail sales surge in February

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

The Office for National
Statistics said sales grew 1.0% last month, putting them up 5.5% on the year.
Analysts had expected a decline of 0.2% on the month and an annual rate of 3.6%.

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%, against -0.8% in January.

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

Public sector net borrowing
was 2.67bln and the public sector net cash requirement was 2.89bln — both the
biggest for a February in more than a decade.