UK retail sales volumes fell 0.4% in February, according to the Office for National Statistics, pulling back after a strong 2% rise in January as consumers who had brought forward spending to take advantage of January discounting stepped back from the shops.

The monthly dip was driven by weaker supermarket sales and a fall in non-store retailing. Despite the slip, sales volumes rose 0.7% over the three months to February compared with the previous quarter, and were up 2.5% on an annual basis.

Online sales continued to grow, rising 0.6% in February and jumping 11.4% year-on-year, with online’s share of total retail climbing to 28.2%.

Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said the figures came in better than expected and painted a reasonably healthy picture of consumer spending heading into the new year.

“Stronger-than-expected retail sales volumes in February – coupled with an upward revision to January’s data – suggest that consumers’ spending was rising at a healthy pace before the war in Iran ripped up the script for the year ahead.”

He added that the data supported Pantheon’s forecast for GDP growth of 0.2% quarter-on-quarter in Q1, up from 0.1% in Q4 2025.

But he cautioned that the outlook beyond that is deteriorating fast. “The more timely survey-based data show that consumers’ confidence is already being hit, suggesting that households’ spending will dip in Q2.”

Jordan-Doak pointed to a string of warning signs, including the BRC’s consumer sentiment survey showing household confidence in finances dropping to a two-year low in March, GfK’s major purchases balance hitting an eleven-month low, and the CBI’s sales balance falling to -23 from -16 in February.

His overall call is sobering: households’ spending is expected to rise by just 0.1% quarter-on-quarter on average between Q2 and Q4 this year, half the rate seen in Q1.