A surprise surge in high street sales last month suggested that consumer spending is proving more resilient than expected in the face of the credit squeeze, dealing a blow to hopes of an interest rate cut as soon as next month.

The volume of sales rose by 1 per cent in February and January’s rise was revised up to 1.1 per cent, from 0.8 per cent, figures from the Office for National Statistics showed.

The surprise increase was mainly driven by food sales that rose by 1.6 per cent as consumers stocked up on Valentine’s Day and Mothering Sunday gifts. This will indicate to rate-setters on the Bank of England’s Monetary Policy Committee (MPC) that consumers are withstanding the pressure of the credit crunch.

Nonstore retailing and repair, which includes mail order and specialist online retailers, rose by 1.7 per cent.

The annual rate of growth eased a little to 5.5 per cent, from 5.9 per cent in January, the figures showed. This was still much higher than analysts’ forecasts of a 0.2 per cent monthly decline and a 3.5 per cent annual rise.

The data showed that goods prices were falling less sharply last month than in recent times as retailers cope with greater cost pressures. In a further worry for the Bank of England on inflation, the figures indicated that year-on-year prices for goods in the shops fell by 0.3 per cent last month, compared with a steeper 0.8 per cent year-on-year decline seen in January.

Retailers’ costs are being boosted by manufacturers trying to charge more for items made domestically, by higher import bills after a slide by the pound and by increased bills for energy.

Howard Archer, of Global Insight, an economic consultancy, said: “The strength of retail sales in February is a major surprise, particularly as there appears to have been less discounting.”

Vicky Redwood, of Capital Economics, said: “It’s hard to see what is keeping consumers spending. Yet these figures suggest that they certainly are – boosting the chances that the MPC will hold on to May before cutting rates again.”

Sales by nonfood stores rose 0.5 per cent last month, but the slowing housing market hit retailers of household goods, whose sales fell 4.2 per cent – the largest drop since February 2000.

The stronger than expected sales figures triggered steep gains in sterling, reversing some of its recent losses, as markets scaled back their bets on early base rate cuts. Sterling’s advance sparked the steepest one-day fall in the euro against the pound for almost four years, with the euro tumbling by more than 1 per cent, to 77.84p, from a record high of 79.12p on Monday.

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