By Joshua Kirby

British shoppers loosened their purse strings last month, offering a little succor to an economy braced for minimal growth this year.

Retail sales grew 1.0% in February from a month earlier, the Office for National Statistics said Friday, outperforming economists' expectations for a fallback in sales. That was driven by spending on clothes, thanks in part to discounts, as well as higher demand for gold jewelry, often an indicator of growing economic uncertainty.

Still, sales at British stores remain below their prepandemic level as uncertainty and rapid price inflation continue to weigh on confidence to spend. Annual inflation has eased from the double-digit peaks it reached in 2022 but is still trending above policymakers' target of 2% on year, limiting the boost to real incomes from higher pay packets and keeping consumers wary about splashing out on big-ticket items. Sticky inflation has kept the Bank of England from cutting rates as fast as peers such as the European Central Bank, adding to the pressures on economic growth.

"The inflation outlook remains a barrier to faster cuts," economists at Pantheon Macroeconomics wrote in a note this week.

The economy increased just 0.1% at the end of last year, the ONS confirmed Friday, though it rose 1.1% for the year as a whole, a little more than previously estimated. For the first quarter of 2025, economists expect U.K. GDP to expand a little, despite a backslide in January.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

March 28, 2025 03:20 ET (07:20 GMT)

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