UK retail sales were stronger than expected in the first two months of the year as wet weather prompted consumers to buy clothing and more goods from Internet stores.

The volume of goods sold in shops and online was unchanged last month after a 3.6% gain in January, which was revised up by 0.2 of a point, the Office for National Statistics said. Economists had expected a drop of 0.4% for February.

The figures suggest consumers are shaking off the pinch from the cost-of-living crisis even though inflation has eased for more than a year. Prime Minister Rishi Sunak is hoping a cut in payroll taxes along with expectations that the Bank of England will start easing borrowing costs in the next months will add to consumer budgets ahead of a general election likely later this year.

“There was growth in clothing, which rebounded after recent falls as people invested in the new season’s collections, as well as department stores,” said Heather Bovill, a senior statistician at the ONS. “These were offset by falls in fuel sales, possibly affected by rising prices, and a reduction in food sales.”

In fact, both clothing and department store sales were noticeably higher as new collections dropped in-store and online. But retailers said promotions still counted towards the growth so they’re not out of the woods yet as far as markdowns are concerned. The appetite to buy new clothes was seen online too and this was clearly boosted by the wet weather that kept some shoppers out of physical stores. Overall, online retailers had their biggest boost in sales since July 2023, aided by those downpours.

UK consumer confidence stalled in March, shedding some of the recovery in sentiment experienced in recent months, according to a GfK report Friday. But an index measuring people’s attitude toward their own finances rose to the highest since 2021.

With wages now outpacing prices, living standards are rising once again. Inflation has fallen from over 11% in 2022 to 3.4% last month and is on course to drop below the 2% Bank of England target by April.

Retailer Next Plc, whose performance is a closely watched indicator of consumer demand, expects profits to reach £1 billion this year, saying shoppers are set to take advantage of higher wages to spend more on fashion. 

The average worker could also get an extra £900 in annual tax savings this year, thanks to the 2-point cut in national insurance contributions announced in the March budget, repeating a reduction that took effect in January. Around 27 million employees and 2 million self-employed workers are set to benefit.

The British Retail Consortium said its measure of sales rose just 1.1% in February, the slowest pace in 18 months. Separate credit card data from Barclays showed spending grew at a significantly slower pace than inflation.

Retailers blamed Britain’s rainy weather for keeping shoppers away from high streets. Some parts of the UK experienced the wettest February since Met Office records began in 1836, while most of country saw below average sunshine levels.

With Sandra Halliday