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UK retail sales beat estimates, but underlying position offers little to cheer

U.K. retail sales grew more than expected in April as petrol sales reported the largest recovery from adverse weather-hit March, data from the Office for National Statistics showed.

Sales volume rose 1.6% month over month in April from a revised 1.1% decline in March. The Econoday consensus estimate was a 0.9% growth rate for April.

The pound was up 0.38% to $1.3398 as of 5:54 a.m. ET.

Excluding department stores, all sectors recovered in April, with a 4.7% rise in petrol sales driving the overall rebound. Sales volume at department stores slipped 0.9% in April.

Year over year, overall sales volume was up 1.4% in April.

Excluding automotive fuel, sales volume was up 1.3% month over month and 1.5% in annual terms.

However, "the underlying position remains subdued with the volume of goods sold over the last six months broadly unchanged," said Rob Kent-Smith, head of national accounts.

"Over the longer-term, retail sales growth has slowed considerably, with increases in food, household goods and internet retailers being largely offset by declines across all other types of retailing," Kent-Smith added.

While the 1.3% increase in retail sales suggests that the high street managed to regain some poise after a tough first quarter, it does not tally with other data as footfall fell again in April and payments company Visa noted a further drop in spending, ING said. "For this reason, we don't think the retail sector is out of the woods just yet," according to the report.