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UK Retail Sales Unexpectedly Rise In February; Borrowing Hits 17-year Low

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UK retail sales rose in February, defying expectations for a decline, despite a sharp decline in food sales, preliminary data from the Office for National Statistics showed on Thursday.

Retail sales grew 0.4 percent month-on-month after a 0.9 percent rise in January. Sales rose for a second straight month. Economists had forecast a 0.4 percent decline.

Sales growth in all other main sectors offset the slump in food stores sales, which was the biggest fall since December 2016.

Food retailers suggested that "getting back to normal" following the January sales had contributed to this fall, the ONS said.

"Retail sales continued to bounce back in the three months to February with strong increases in fuel sales and online shopping," ONS Head of Retail Sales Rhian Murphy said.

"Food growth slowed, however, due to a significant fall for supermarkets, specialist food and alcohol stores in February after the sales and promotions seen in January came to an end."

Excluding auto fuel, retail sales grew 0.2 percent monthly in February after a 1.1 percent rise in January. Economists were looking for a 0.4 percent decrease.

On a year-on-year basis, retail sales volume rose 4 percent year-on-year following a 4.1 percent increase in January. Economists were looking for a 3.3 percent increase.

Retail sales excluding auto fuel grew 3.8 percent year-on-year after a 4 percent rise in January. Economists had expected 3.5 percent growth.

Separate data from the ONS showed that the country's public finances situation was better than expected in February.

Public sector net borrowing excluding public sector banks was GBP0.2 billion, which was GBP 1 billion less than the same month last year. Borrowing was also the lowest for the month since 2017.

Borrowing in the financial year-to-date was GBP 23.1 billion, which was GBP 18 billion less than the same period last year. That was the lowest year-to-date borrowing for 17 years, the ONS said.

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