British retail sales rose at the fastest pace in three months in February, beating expectations and suggesting Britain's consumer-led economic recovery remains strong ahead of national elections in May. Retail sales rose 0.7 percent last month, their best growth since November and up from 0.1 percent in January, the Office for National Statistics said on Thursday.
Falling shop prices declined at the fastest rate since at least 1997 encouraged Britons to hit the shops in February, with furniture selling particularly well. A separate Confederation of British Industry survey showed retail sales grew at a solid pace this month as well, which will cheer Prime Minister David Cameron's Conservative Party ahead of a closely-fought election on May 7.
The Office of National Statistics (ONS) said Britain recorded zero inflation in February for the first time since the 1960s. It is widely expected to turn negative in the coming months amid lower energy amid falling food and oil prices. Recently a number of Bank of England officials have publicly dampened any concerns about deflation. This comes as they prepare to enter a period of silence ahead of the general election in May next week.
In the US consumer prices rebounded last month as petrol prices rose for the first time since June, official figures show. The Consumer Price Index rose by 0.2% in February, but remained unchanged from a year earlier. The monthly rise follows three consecutive months of declines, including a 0.7% drop in January.
Petrol prices rose 2.4% in February, after falling by 18.7% in January. Economists expect the strong dollar to keep inflation low in the coming months as it will make imported goods cheaper for consumers. The dollar has risen sharply in value in the past year against the euro and the yen, as the US economy has grown more quickly than those of Europe and Japan.
Job growth in the US has been robust and the economy is steadily expanding. Typically, that would lead the Fed to raise interest rates from near zero, where they have been since December 2008. But the CPI is far below the 2% target set by the Federal Reserve and this is complicating the Fed's decision on when to raise interest rates.
The us economy was also boosted by another impressive jobs figure after fewer Americans than forecast filed applications for unemployment benefits last week as improved weather conditions ushered in labour market stabilisation. Jobless claims fell by 9,000 to 282,000 in the seven days ended March 21, the lowest level since mid-February.
In Europe Last week Mario Draghi spoke at the Economic and Monetary Affairs Committee where he gave a more positive outlook for the Eurozone. Draghi mentioned that although the ECB expects inflation in the Euro Area to remain very low or negative in the months ahead due to volatile energy prices, with inflation rates increasing gradually towards the end of the year. This will be supported by the impact of the lower exchange rate and the recovery of oil prices from their current troughs. The latest ECB projections foresee inflation at 0% in 2015, rising to 1.5% in 2016 and 1.8% in 2017.
Business output in Europe also grew at its fastest rate in nearly four years in March, the Markit composite purchasing managers' index (PMI) rose to 54.1 compared with 53.3 a month earlier the highest level in 46 months.
The improvement in business output was the result of growth in new orders that had increased at their fastest rate since 2011. Employment also grew at its fastest rate since August 2011. Job creation in the service sector held steady near February's four year high, while in the manufacturing sector it grew at its quickest pace since April last year. Crucially, the survey showed that deflationary pressures eased in March with prices falling at the slowest rate since July.