UK retail sales suffer the biggest three-month drop

British retail sales in the three months to February recorded their biggest slide in nearly seven years as higher fuel prices eroded shoppers' disposable income, official data showed on Thursday. British inflation is starting to climb rapidly in the wake of the hefty slide in sterling seen after June's vote to leave the European Union - something economists expect to eat into consumer demand, the main motor of British economic growth. Sales volumes in February alone beat all economists' expectations in a Reuters poll, jumping by 1.4 percent from January, but this was too little to offset a drag from weak demand in previous months, the Office for National Statistics said.

Looking at the three months to February as a whole, sales volumes were down by 1.4 percent after a 0.5 percent decline in the three months to January, their biggest fall since March 2010. A drag on overall first-quarter economic growth now looks all but certain unless March sees an unprecedentedly large jump in sales, the ONS said. Official data earlier this week showed consumer price inflation jumped to 2.3 percent, its highest in more than three years, and the narrower measure of inflation used by the ONS to calculate retail sales growth rose to its highest since March 2012 at 2.8 percent.

"The underlying trend suggests that rising petrol prices in particular have had a negative effect on the overall quantity of goods bought over the last three months," ONS statistician Kate Davies said. Compared with a year earlier, February sales volumes were up 3.7 percent - beating forecasts for a 2.6 percent rise - after growing just 1.0 percent on the year in January.

-Reuters, London