UK retail sales surge on falling inflation

Volume of retail sales in the United Kingdom climbed considerably more than market expected in February amid by lower inflation and improving consumer confidence in the country, with all categories of sales showing gains. All in all, British retailers sold 0.7% more goods and services in the previous month, even though analysts expected the indicator to add only 0.4% on a monthly basis. The same growth number was registered by the retail sales indicator which excludes fuel. Annual gain, in turn, accounted for as much as 5.7%, far above than 4.7% estimated by economists. In addition, sales' volume for January was revised upwards, from a decline of 0.3% up to an increase of 0.1%. Consumer spending in the UK is being provided with positive impetus by rising confidence in sustainable economic growth, falling gasoline prices and rising real wages. Inflation fell to as low as zero last month, while prices of shop goods dropped by 3.6% on the annual basis, measured by the deflator, the fastest downward change since 1996.

Meanwhile, Confederation of British Industry announced a better than forecasted advance in the index for realised sales. This indicator, calculated by surveying 125 retail and wholesale companies, jumped to 18 points in March, up from just one point a month ago. A reading above zero speaks for higher sales volume, which indicates that consumers are prepared to spend more even despite a threat of deflation the nearest future.