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Quarterly retail sales show biggest drop since 2010

Retail sales in the three months to February recorded their biggest drop in almost seven years as rising petrol prices cut into households' disposable income.

The Office for National Statistics (ONS) figures show month-on-month retail sales jumped by 1.4% from January, exceeding predictions.

But the rise was not enough to offset two consecutive months of decline in December and January.

Across the three months to February, sales volumes were down by 1.4% after a 0.5% drop in the three months to January, the largest decrease since March 2010 and only the second fall since December 2013.

The drop came as petrol station prices leapt 18.7% year-on-year, helping to push average store prices, including fuel, 2.8% higher - the largest growth since March 2012.

Online sales increased year-on-year by 20.7% and by 3.3% on the month, accounting for about 15.3% of retail spending.

ONS senior statistician Kate Davies said: "February's retail sales figures show fairly strong growth, though the underlying three-month picture shows falling sales as February's figures follow two consecutive months of decline in December and January.

"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."

Rising fuel and food prices pushed inflation beyond the Bank of England's 2% target in February, hitting its highest level since September 2013, according to separate figures released earlier this week.

The ONS said the Consumer Price Index (CPI) measure of inflation reached 2.3% last month, up from 1.8% in January.

The supermarket price war had kept a lid on price rises, but food is becoming more expensive as producers begin to pass down soaring import costs triggered by the pound's slump since the EU referendum result.

Ian Gilmartin, head of retail and wholesale at Barclays, said: "The fall in the three-month figure is a slight worry, but it's important to recognise that this isn't driven by February's data, and partly reflects the changing spending dynamics around Christmas which led to strong sales in November.

"Inflation remains front of mind for all of us in retail, and there's no doubt that rising fuel prices are having an impact on the amount of disposable income people have available for other purchases, making this result all the more impressive."

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