-Rain Newton-Smith, CBI director of economics
British retail sales volumes tumbled to the lowest level in 21 months in February, driven down by weaker food sales. Although, both retail sales volumes and orders dropped markedly in the reported month, store owners were still upbeat over the short-term, saying that sales will bounce back in March. The Confederation of British Industry's retail sales balance plunged to +1 from +39 in January, considerably below economists' forecasts of +34 and the lowest level since November 2013. A reading above 0.0 points to higher sales volume, while below indicates lower. Official data last week showed monthly retail sales fell to the lowest level in twelve months of 0.3% in January but increased 5.4% on the year.
The latest Markit's Household Finance Index indicated ultra-low inflation in the country has continued to boost consumers' optimism at the beginning of the year. Financial morale among consumers jumped sharply as the current and future inflation expectations dropped markedly in recent months. Economists and Bank of England policy makers alike believe low inflation and cheaper energy should continue to underpin spending throughout this year. Consumer price inflation declined to all-time low of 0.3% in January, dragged down largely by cheaper fuels and food prices, and is forecasted to slip further towards zero in spring.
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