Industrial production also rose for the first time since January. And there was encouraging news on the inflation front, with an increase in consumer prices of only 0.1 per cent compared with 0.3 per cent in May. The annual rate of inflation fell to 3 per cent.
"The signs are that the economy has been through the worst and is starting to pick up again," said David Bloom, economist at James Capel. Mark Cliffe, economist at HSBC Markets, said the figures "will reduce expectations of a quick follow-up to last week's rate cut".
The monthly rise of 0.7 per cent in retail sales in June was complemented by a big upward revision for May from an initial estimate of 0.2 to 0.9 per cent. Taking the second quarter as a whole, this meant that retail sales rose by 2.8 per cent compared with 1.8 per cent in the first quarter.
The main factor was much more buoyant sales of cars, up by 1.9 per cent in June and revised up from 0.5 to 2 per cent in May. Excluding cars, retail sales rose by only 0.3 per cent in June.
However, with heavy discounting in the car market, there remains a question mark over whether car sales will continue to increase at this rate.
Industrial production also did slightly better than expected with a rise of 0.1 per cent against market predictions of continuing stagnation.
Capacity utilisation fell to 83.5 per cent, the lowest rate in 16 months. And new car output rose after three monthly drops.