UK retail sales rose unexpectedly in May, indicating strength in the economy that the Bank of England fears may be feeding inflation.
The volume of goods sold in stores and online rose 0.3% in May after an 0.5% gain the month before, the Office for National Statistics said Friday. Economists had forecast a 0.2% decline.
Warm weather boosted sales of summer clothing, and there was increased spending on fast food and takeaway meals because of the extra public holiday for the coronation of King Charles III on May 8.
The figures follow a report showing consumer confidence rose to a 17-month high. Together, they suggest consumers are weathering the cost-of-living squeeze better than expected, despite elevated inflation and soaring interest rates.
Sales in the three months to May rose 0.3%.
For now, spending is being supported by low unemployment, falling energy prices, the extension of government subsidies for energy bills into the second quarter and a huge 10.1% increase in welfare benefits in April.
However, the resilience may prove short lived as rocketing mortgage costs pile further pressure on family budgets.
On Thursday, the Bank of England stepped up its fight against inflation with an unexpected half point rate increase. Money markets see rates hitting 6% next year, a level that could trigger a recession.
--With assistance from Elina Ganatra.
