The better-than-expected retail sales data, which showed that sales volumes grew by 1.1 per cent last month, boosted hopes that the slowing UK economy is headed for a "soft landing".
Speaking at the University of Hertfordshire last night, Eddie George, Governor of the Bank of England, said: "We are reasonably confident that the slowdown will be mild and short-lived, certainly compared with equivalent periods in the past."
Yesterday's Office for National Statistics figures suggested that UK consumers are willing to spend, but only if the price is right.
Sales of clothes and shoes - which were heavily discounted by retailers last month - grew by a stronger-than-expected 2.9 per cent. Price cutting also helped sales of household goods such as furniture and electrical appliances, which were up by 2.6 per cent on the month.
Neil Parker, economist at Royal Bank of Scotland, said: "This week's stronger RPI [Retail Price Index] data, the better public finances, the better employment data and the better retail sales data all point in a similar direction. The UK economy is not in as bad a shape as people are making out."
However, other analysts stressed that the overall picture for high-street spending remained weak, with December sales particularly disappointing. Taking the three months to January together, sale volumes were just 1.5 per cent higher than in the same period a year earlier, the lowest growth rate since March 1996.
John O'Sullivan at Greenwich NatWest said: "The jury must remain out as to whether sales growth will be maintained in the coming months. One worrying aspect of the data is the apparent reluctance on the part of consumers to spend on big-ticket items."
Separate figures revealed that growth in M4 - the broad measure of money supply - was lower than expected. M4 was unchanged between December and January, and up by 7.3 per cent year-on-year, the lowest growth rate since mid 1995.
Economists attributed the figures to January's record government debt repayment, announced earlier this week. M4 lending to both companies and individuals remained relatively robust, according to analysts.Reuse content