Retail sales soared unexpectedly in January at the fastest pace since April 2011, as consumers splashed out on furniture and sports goods, official data showed on Friday, adding to signs that the economy is on course for recovery.

A string of strong business surveys and some stabilisation in the labour market have raised hopes that Britain's economy will avoid recession after contracting in the last three months of 2011.

Retail sales volumes rose 0.9 percent on the month to give an annual rise of 2.0 percent, as stores lured cash-strapped Britons with discounts on household goods and furniture, the Office for National Statistics said.

In contrast, economists had forecast a monthly fall of 0.4 percent and an annual rise of 0.5 percent. This compares with a monthly rise of 0.6 percent in December, when shops lured customers with hefty pre-Christmas discounts.

Earlier on Friday, traditional retail bellwether John Lewis said its department store sales rose 4.1 percent on the year in the week to February 11.

On Thursday a survey by lender Nationwide showed that British consumers' confidence rose in January to its highest level since August as they grew much more upbeat about the following six months.

Many Britons have been cutting back spending over the past year as price increases outpaced wage rises and higher unemployment weighed on confidence, and the lack of consumption has been one of the main drags on economic growth.

Business surveys had earlier indicated a weak January for Britain's retailers. However, they also showed that retailers were slightly less pessimistic about business in February.

The retail sales deflator ticked down to 2.2 percent on the year in January - the lowest since November 2009 - indicating that inflationary pressures are easing as the Bank of England is predicting.

The central bank has left the door for further stimulus slightly open after it decided earlier this month to pump another 50 billion pounds of quantitative easing into the economy.

(Reporting by Sven Egenter and Olesya Dmitracova)