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21 April 2011
Last updated at 05:22 ET
Retail sales in the UK registered a surprise pick-up in March, led by strong food and non-store sales.
Sales volumes rose 0.2% compared with a month earlier according to the Office for National Statistics (ONS).
Market analysts had expected a much weaker number after a downbeat survey was released by the British Retail Consortium last week.
It follows a revised 0.9% drop in sales in February - a fall that had also caught analysts by surprise.
The ONS said in its latest retail sales bulletin that the volume of sales was up 1.3% compared with March 2010 on a seasonally adjusted basis - which takes account of the fact that Easter fell in March last year.
Rates decision The numbers caught markets by surprise - instead of a 0.2% rise, economists had expected a month-on-month fall in sales of 0.5%.
Sterling jumped half a cent against the dollar to $1.654 after the data was released, as currency traders priced in a higher probability that the Bank of England will raise rates over the summer.
In the minutes from its latest rate setting meeting in April, the Bank indicated that the strength of recovery in consumer spending was a key question for them.
Continue reading the main story However, the retail price deflator - an important proxy for inflation included in the data release - slowed down to a 3.4% annual increase from 4% in February.
"The consumer is not quite as flat on his back as had been feared," said Howard Archer of research group IHS Global Insight.
However, he pointed out that despite the modest pick-up in sales and slowdown in price rises in the month, consumers were still seeing their incomes squeezed by inflation and "the underlying impression remains that consumers are less able and willing to spend".
He also noted that consumer spending for the first quarter of the year as a whole had only risen 0.3% versus the previous three months, which did not bode well for the economy, as retail sales comprise 65% of all spending.
Mixed picture Smaller shops were doing well - including those in London selling memorabilia for the royal wedding, Aileen Simkins from the ONS told the BBC.
The good weather had also helped sales of items such as climbing frames, as people prepared for a long summer.
Other sectors showing strong growth were garden stores and toy stores, while IT stores were also doing well on the back of new product launches, she said.
However, supermarkets had suffered a more challenging month, which showed that there was a mixed picture across the retail sector, she said.
The ONS figure comes after supermarket giant Tesco revealed earlier this week a 0.7% drop in UK like-for-like sales in the three months to 26 February.
Meanwhile Home Retail Group reported shrinking markets for its Argos and Homebase chains, and predicted another tough year in 2011.
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Sales volumes rose 0.2% compared with a month earlier according to the Office for National Statistics (ONS).
Market analysts had expected a much weaker number after a downbeat survey was released by the British Retail Consortium last week.
It follows a revised 0.9% drop in sales in February - a fall that had also caught analysts by surprise.
The ONS said in its latest retail sales bulletin that the volume of sales was up 1.3% compared with March 2010 on a seasonally adjusted basis - which takes account of the fact that Easter fell in March last year.
Rates decision The numbers caught markets by surprise - instead of a 0.2% rise, economists had expected a month-on-month fall in sales of 0.5%.
Sterling jumped half a cent against the dollar to $1.654 after the data was released, as currency traders priced in a higher probability that the Bank of England will raise rates over the summer.
In the minutes from its latest rate setting meeting in April, the Bank indicated that the strength of recovery in consumer spending was a key question for them.
Continue reading the main story However, the retail price deflator - an important proxy for inflation included in the data release - slowed down to a 3.4% annual increase from 4% in February.
"The consumer is not quite as flat on his back as had been feared," said Howard Archer of research group IHS Global Insight.
However, he pointed out that despite the modest pick-up in sales and slowdown in price rises in the month, consumers were still seeing their incomes squeezed by inflation and "the underlying impression remains that consumers are less able and willing to spend".
He also noted that consumer spending for the first quarter of the year as a whole had only risen 0.3% versus the previous three months, which did not bode well for the economy, as retail sales comprise 65% of all spending.
Mixed picture Smaller shops were doing well - including those in London selling memorabilia for the royal wedding, Aileen Simkins from the ONS told the BBC.
The good weather had also helped sales of items such as climbing frames, as people prepared for a long summer.
Other sectors showing strong growth were garden stores and toy stores, while IT stores were also doing well on the back of new product launches, she said.
However, supermarkets had suffered a more challenging month, which showed that there was a mixed picture across the retail sector, she said.
The ONS figure comes after supermarket giant Tesco revealed earlier this week a 0.7% drop in UK like-for-like sales in the three months to 26 February.
Meanwhile Home Retail Group reported shrinking markets for its Argos and Homebase chains, and predicted another tough year in 2011.
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