The key gauge of consumer demand grew 6.4% year-on-year in May, according to data published by the National Bureau of Statistics (NBS).
The figure beat the 4.9% growth forecast in a Bloomberg survey of economists and was also sharply up from April’s 5.1% increase.
However, the NBS also said industrial production grew a below-par 5.8%.
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note that the retail sales figures “came as a surprise”, but warned the economic outlook for the rest of the year was uncertain.
The NBS said the economy “maintained stability” last month as authorities “stepped up the implementation of more proactive and effective macro policies”.
However, it added that “there are still many unstable and uncertain external factors, and the internal momentum for expanding domestic demand needs to be further strengthened”.
Beijing has struggled to sustain strong growth since the pandemic, grappling with deep-seated problems at home including a persistent slump in domestic consumption and a debt crisis in the property sector.
“Commercial property prices in a representative group of 70 cities fell month-on-month in May, reflecting continued consumer caution,” the NBS said.
“The surveyed unemployment rate – another notable figure as millions of young people struggle to find suitable work – edged down to 5% in May from 5.1% the previous month,” the bureau said.
China is targeting economic growth of around 5% this year.
However, the picture is also complicated by trade tensions with Washington that erupted in a gruelling tit-for-tat tariff war after US President Donald Trump took office in January.
The two sides have since agreed a pause on retaliatory levies but have not yet announced a lasting deal.
Trade delegations met in London this month for a second round of high-stakes talks, with Trump saying the superpowers reached an agreement that would preserve a truce.
Li Chenggang, the head of the Chinese team, said communication with the US had been “very professional”, but did not say whether an accord had been reached.