Retail sales improved more than expected in February, but masked a strongly diverging trend among retailers as shoppers focused on essentials, a survey by the Confederation of British Industry showed on Tuesday.
The CBI's monthly distributive trades survey's reported sales balance rose to -2 from -22 in January, versus economists' forecasts for -19, in a further sign that consumers are cautiously returning to the shops.
The expected sales balance for December climbed to +2 for March from -10 for February.
There are more positive signs on our High Street, but consumers are clearly continuing to focus their spending on day to day needs rather than big ticket or luxury items, said Judith McKenna, chairwoman of the DTS panel.
With disposable incomes under constant pressure, retailers remain concerned about the general business outlook for the rest of 2012, she said.
A breakdown of the data showed food retailers reported their strongest sales growth since last May, while sales of durable household goods continued to fall sharply, and clothing sales fell at their fastest pace in almost 3 years.
Department store sales fell at their fastest pace since May 2010, hardware and DIY sales fell at their sharpest pace since August 2005.
The data follows fourth-quarter GDP data which indicated that a rise in consumer spending, alongside an upsurge in exports, offered Britain's economy a solid base to bounce back from a dip in the last three months of 2011. Consumer spending rose by 0.5 percent on the quarter - the first quarterly increase in one-and-a-half years.
In another sign that Britain's all-important consumers are starting to find their feet, a separate survey by the CBI showed on Tuesday that the decline in consumer-services firms' business volumes had slowed substantially in the past quarter and was expected to continue doing so in the coming three months.
In another sign of optimism, discount clothing chain Primark said it expects a 15 percent annual rise in revenue for the six months to March.
(Reporting by Olesya Dmitracova, writing by Fiona Shaikh)