The UK economy is slightly stronger than expectations with retail sales rising 1% in February in defiance of analysts’ forecasts of a 0.4% fall.

New data showed the UK economy grew faster than initially estimated in the first half of last year.

The Office for National Statistics (ONS) has revised its estimate for gross domestic product (GDP) growth between January and March 2024 to 0.9% from 0.8%. Second-quarter growth was raised to 0.5% from 0.4%.

The UK economy expanded by 1.1% over 2024, up from the previous estimate of 0.9% which means it was the joint-third fastest growing economy in the G7 last year, behind the United States (2.8%) and Canada (1.5%).

The uplift in retail sales volumes marked the second consecutive month of growth, according to the ONS.

This follows a rise of 1.4% in January 2025, revised down from a rise of 1.7% in its last bulletin.

The uplift will provide some comfort for retailers who have warned that sharp rises in costs from next month will erode margins, force job cuts and potentially put some out of business.

Retail sales volumes rose by 0.3% in the three months to February 2025, compared with the three months to November 2024, and by 2% when compared with the three months to February last year.

The increase was largely driven by spending at department stores, hardware shops and clothes outlets.

Sales at food stores fell by 2%, indicating a greater appetite among consumers for eating out.

Household goods stores posted the best performance, recording a 6.8% jump in sales as customers upgraded their household equipment.

Sales at clothes and shoe shops rose by 2.3% compared with the previous month, as shoppers sought to take advantage of widespread discounting.

Annual retail sales growth came in at 2.2%, compared with 0.6%in January.