Sales recovery sparks worry
Retail sales rose 1.4 per cent in February sparking fears of another interest rate rise. The surge follows a 1.5 per cent slump in January.

The figures from the Office for National Statistics showed that sales growth of 4.7 per cent in clothing stores had allowed the retail sector to enjoy the highest month-on-month increase since January 2005. Household goods and other non-food stores were also strong.

The ONS said: 'Underlying growth in retail sales volume remained robust and close to the long-run average.'

It revised its figures for January up to a 1.5 per cent drop from a fall of 1.8 per cent fall in December.

Year-on-year sales in February were up 4.9 per cent up on last year. This was contrary to expectations of many analysts polled by Dow Jones, who were expecting a 0.8 per cent monthly rise and a 4 per cent annual increase.

Sales in food stores were up 3.8 per cent over the year with a 13 per cent increase for non-store retailing - the highest rise for this sector since records began in 1986.

However, this was achieved with a 0.3 per cent cut in overall prices. The average weekly value of sales in January was£4.6 billion - 4.7 per cent up on February last year.

UK economist for Capital Economics Vicky Redwood said: 'Growth of total household spending might slow a touch in Q1. Overall, the consumer sector is still looking relatively healthy against the background of three interest rate rises since last August.'

As a result, she concluded that 'the way remains clear' for the Bank of England's monetary policy committee to raise interest rates.

Barclay's national director of retail Paul Clarke said that retailers would have more immediate concerns including 'whether the bounce back in retail sales will be maintained over the important Easter weekend'.