UK retail sales unexpectedly rise but gloom seen persisting

British retail sales volumes unexpectedly rose by 0.5% in monthly terms in January but the overall picture remained one of weak demand from inflation-hit consumers, official data on Friday.

A Reuters poll of economists had pointed to a 0.3% fall in sales last month compared with December. Sterling fell slightly against the US dollar and the euro after the data was published

Sales fell by 5.1% compared with January last year.

Sales volumes in December fell more deeply than previously reported, dropping by 1.2% from November rather than the original estimate of a 1.0% decline.

"After December's steep fall, retail sales picked up slightly in January, although the general trend remains one of decline," ONS Director of Economic Statistics Darren Morgan said in a statement.

Fuel sales rose, reflecting a fall in prices, and discounting helped boost sales for online retailers as well as jewellers, cosmetic stores and carpet and furnishing shops, Morgan said.

But clothing store sales fell back sharply having risen for four months and food store sales fell again as consumers hunted for cheaper products to ease their cost-of-living squeeze.

Britain's economy is widely expected to fall into a recession this year and the consumer confidence index published by polling firm GfK last month showed households close to their gloomiest since at least 1974.