diff --git a/cmd/cloud-init-server/group_handlers.go b/cmd/cloud-init-server/group_handlers.go
index 7f4a401..85d97b3 100644
--- a/cmd/cloud-init-server/group_handlers.go
+++ b/cmd/cloud-init-server/group_handlers.go
@@ -116,7 +116,7 @@ func (h CiHandler) UpdateGroupHandler(w http.ResponseWriter, r *http.Request) {
 	}
 
 	// update group key-value data
-	err = h.store.UpdateGroupData(groupName, data)
+	err = h.store.UpdateGroupData(groupName, data, true)
 	if err != nil {
 		http.Error(w, err.Error(), http.StatusInternalServerError)
 		return
diff --git a/internal/memstore/ciMemStore.go b/internal/memstore/ciMemStore.go
index 6f62f2e..3742fe6 100644
--- a/internal/memstore/ciMemStore.go
+++ b/internal/memstore/ciMemStore.go
@@ -67,9 +67,13 @@ func (m *MemStore) GetGroupData(groupName string) (cistore.GroupData, error) {
 }
 
 // UpdateGroupData is similar to AddGroupData but only works if the group exists
-func (m *MemStore) UpdateGroupData(groupName string, groupData cistore.GroupData) error {
+func (m *MemStore) UpdateGroupData(groupName string, groupData cistore.GroupData, create bool) error {
 	m.GroupsMutex.RLock()
 	defer m.GroupsMutex.RUnlock()
+	if create {
+		m.Groups[groupName] = groupData
+		return nil
+	}
 
 	_, ok := m.Groups[groupName]
 	if ok {
diff --git a/pkg/cistore/store.go b/pkg/cistore/store.go
index 28298aa..fdbf078 100644
--- a/pkg/cistore/store.go
+++ b/pkg/cistore/store.go
@@ -6,7 +6,7 @@ type Store interface {
 	GetGroups() map[string]GroupData
 	AddGroupData(groupName string, groupData GroupData) error
 	GetGroupData(groupName string) (GroupData, error)
-	UpdateGroupData(groupName string, groupData GroupData) error
+	UpdateGroupData(groupName string, groupData GroupData, create bool) error
 	RemoveGroupData(groupName string) error
 	// Extended Instance Information API
 	GetInstanceInfo(nodeName string) (OpenCHAMIInstanceInfo, error)