* Feb sales +2.1 pct m/m, biggest rise since May '08
* Jan sales revised down to -3.0 pct m/m from -1.8 pct
* Feb rebound led by household goods, especially electricals
* UK retailers see tough 2010, but confident of coping
(Wraps in retailers' results)
By David Milliken and Christina Fincher
LONDON, March 25 A surge in demand for household
electrical goods helped British retail sales bounce back in
February after the worst January on record, official data showed
The Office for National Statistics said sales volumes jumped
2.1 percent last month, the biggest increase since May 2008 and
three times as fast as analysts had forecast.
However, there was a sharp downward revision to January,
when late returns and changes to the way the statistics office
processes the data meant the initial estimate of a 1.8 percent
fall was changed to a drop of 3.0 percent, the biggest since
That meant February sales were up 3.5 percent in annual
terms, only slightly above economists' forecast of a 3.2 percent
"The sharp increases are less impressive than they look,
given that January's falls were revised far bigger," said Vicky
Redwood at Capital Economics.
Sterling briefly spiked as much as half a cent against the
dollar GBP= and hit a one-month high versus the euro
EURGBP=, but then pared gains as traders digested January's
heavy downward revision.
Britain's retail sales series tends to be volatile on a
monthly basis, and interpretation has been complicated by the
incorporation of fuel sales into the main series and a rise in
value-added tax in January.
January also saw Britain's iciest weather in 30 years,
forcing many shops and businesses to close and making it hard
for shoppers to travel.
"Trying to discern an underlying trend from the past few
months is nigh on impossible," said Philip Shaw, economist at
Strong results from Next (NXT.L), Britain's second-largest
fashion chain, and Kingfisher (KGF.L), Europe's biggest home
improvements store added to hopes that retailers could weather
what is expected to be a slow recovery. [ID:nLDE62O0H6]
Britain is coming out of its deepest recession since World
War Two and is facing headwinds from an impending squeeze on
government spending and an ongoing reluctance by banks to lend.
"Given the extent of the decline in January, these numbers
merely represent a rebound," said Peter Dixon at Commerzbank.
"They are therefore not truly indicative of the underlying
strength of the consumer, who remains under pressure from
deleveraging and sluggish income growth and employment
On the plus side, interest rates have been slashed to a
record low of 0.5 percent and are expected to remain at this
level for while, and the Bank of England says its 200 billion
pounds of quantitative easing is still working its way through
Household goods sales surged in February, rising by 11.2
percent, the biggest monthly increase since records began in
January 1988. Sales of electrical items did particularly well.
Excluding fuel, retail sales volumes rose 1.6 percent on the
month and were up 5.4 percent on the year, the fastest annual
growth since May 2008.
An easing of price pressures on the High Street may have
added to consumers' willingness to splash out. The retail sales
deflator fell to 1.6 percent last month from January's 16-month
high of 3.0 percent.
(Editing by John Stonestreet)