Low food and fuel prices spur British spending spree

Latest retail figures show retail sales volumes jumped by a much stronger than expected 0.7% in February

Low inflation has given shoppers a real-terms pay boost (Getty)

New figures show that shoppers are keen to spend the extra cash they're saving on petrol on food on the high street.

Retail sales volumes jumped by a much stronger than expected 0.7% in February, while January’s sales were also revised higher, according to the Office for National Statistics. On the high street the strongest performers over the month were department stores, where sales rose up 1.7%, while household goods also saw a 1.2% rise. Internet sales rose 1.9%.

Including plunging prices at petrol stations, prices were 3.6% lower than a year ago in February - the biggest annual fall since records began in 1997.

The spending surge comes as inflation over the month fell to an all-time low of 0%. That has given shoppers a real-terms pay boost, as wages across the country rose at an annual 1.8% pace in the quarter to January.

Scotiabank analyst Alan Clarke said: “If you wanted a demonstration that low food and energy prices are good for consumer spending, then this is it. People are clearly not deferring their spending plans amid deflation speculation - they are spending the windfall.”