Retail sales unexpectedly fall 0.3% in February vs. 0.6% expected

• UK Retail Sales fell -0.3% MoM in February, a negative surprise.
• Core retail sales fall 0.7% in February in the UK.
• GBP/USD gives back some of the early gains and pulls back towards 1.3200 after disappointing UK data.

UK Retail Sales fell -0.3% MoM in February vs. 0.6% increase expected and from 1.9% previously. Core retail sales, which do not take into account auto fuel sales, fell -0.7% vs. 0.5% expected and 1.7% before.

In annualized terms, UK retail sales rose 7% in February vs. 7.8% expected and from 9.4% seen the previous month, while core retail sales increased 4.6% in the reported month vs. 5.6% expected and 7.5% before.

Main Points (via ONS)

“Sales volumes at food stores fell 0.2% in February 2022, with large declines at alcohol and tobacco stores, which may be related to higher spending at pubs and restaurants as confidence in exit; grocery store sales volumes were 0.1% below pre-coronavirus levels in February 2020.”

“Sales volumes in non-food stores increased by 0.6% in February 2022, with growth in clothing (13.2%) and department stores (1.3%), with greater socialization and the return to offices after the lifting of Plan B restrictions in late January; these increases were partially offset by declines in other non-food stores (7.0%) and home goods stores (2.5%) with some retailers suggesting that stormy weather during the month had affected”.

“Fuel sales volumes increased by 3.6% in February 2022 as the lifting of Plan B restrictions in England at the end of January 2022 increased travel; sales volumes were above pre-coronavirus levels February 2022 (0.9%) for the first time.”

Implications for the market

GBP/USD is giving back some of the early gains and pulls back towards 1.3200 after poor UK retail sales data. At time of writing, the GBP/USD pair is trading at 1.3204, up 0.16% on the day.