INSTANT VIEW: Weather blamed on retail sales plunge

LONDON (Reuters) - Retail sales plunged more than expected in February as snowy weather and dismal economic conditions kept consumers away from the shops, official data showed on Thursday.

The monthly fall of 1.9 percent took the annual growth rate to 0.4 percent, its weakest since 1995, the Office for National Statistics said.

ANALYSTS VIEWS:

PHILIP SHAW, INVESTEC

"The figures are weaker than the market was expecting but it is not a huge shock given the Arctic conditions in February and the previous few months' data has been very firm.

"It is very difficult to read what is going on in the High Street given the volatility of the numbers. The MPC has been placing less weight on the official numbers and neither is there any implication for interest rates or quantitative easing."

ALAN CLARKE, UK ECONOMIST, BNP PARIBAS:

"A downward surprise... There are special factors that explain this, not least snow, which obstructed people getting to the shops, that's on top of all the other factors that suggest retail sales should be slowing, not least that this is the worst recession since the war. So, catching up with the reality of the situation."

"Prices of those (textiles, clothing and footwear) have been absolutely slashed, people are holding back on big ticket purchases and spending, but where they see value, and particularly clothing and footwear have seen massive discounts, that's buoying sales volumes."

"Consumer spending should be seriously underperforming and I think this there will be further numbers like this over the coming year."

JAMES KNIGHTLEY, ING

"Still continues to point to a much stronger performance that the British Retail Consortium and Confederation of British Industry retail sales figures. In fact those report are consistent with YoY growth being closer to -4.0% rather than 0.4% we got today. The breakdown shows that the bulk of the weakness was in clothing (-3.7%) and "other stores" which was down 4.8%.

"We suspect further sharp declines are likely given that unemployment is surging, nominal wages are now falling due to lower bonus payments across the economy, wealth is plunging due to weak equity markets and falling house prices while confidence is at all time lows. Consequently the BoE could yet have to further expand its monetary easing through increased purchases of government and corporate bonds."

VICKY REDWOOD, CAPITAL ECONOMICS

"February's sharp drop in the official measure of retail sales ends the recent puzzlingly strong run of figures and supports the message from the more timely surveys that high street spending growth is back on a downward trend.

"The 1.9% m/m fall in overall sales volumes reversed around two thirds of the increase seen in the previous 2 months. Non-food was down even more sharply, by 3.2%, although it had also been growing more strongly than overall sales.

"The annual growth rate now looks much more sensible, at 0.4% compared to 3.8% in January. What's more, we think it has much further to fall. Admittedly, consumers are getting a significant boost to their spending power from falling inflation. But there are plenty of reasons for them to save, not spend, this extra cash."

AMIT KARA, UK ECONOMIST, UBS

"The resilience of that number over the past few months has been something of a surprise, so today's number should be seen in the context of a slowing economy where survey data has been coming off.

"It's not surprising from a big picture point of view, though for the month it is.

"Going forward, I expect consumer spending to stay weak through the year. Food and clothing will be fairly resilient but the rest will decline.

"It's probably broadly in line with what the Bank of England expected.

"I don't think anyone can say we are or are not seeing any benefit from the VAT cut. Things could have been sig worse if it hadn't happened. It's too difficult to draw any conclusions from the data."

GEORGE BUCKLEY, CHIEF UK ECONOMIST, DEUTSCHE BANK

"These numbers are always volatile but they are certainly very weak, certainly weaker than anticipated."

"It shows that the surprising strength over Christmas in volumes growth is unlikely to persist.

"Between November and January was actually the third strongest on record and in February we're obviously getting payback.

"With higher unemployment it is very unlikely that the strength we saw over Christmas is likely to persist.

"The Bank of England might be more keen to focus on the values numbers. They are obviously very keen to look at nominal demand. Because of problems with deflating these figures, it is important to look at values."