British retail sales rose at more than twice the expected rate in September to dent expectations of further Bank of England interest rate cuts.
The Office for National Statistics (ONS) said today that sales rose 0.7 per cent last month. That compared with analysts' forecasts for a rise of 0.3 per cent.
This brought the annual rate of growth to just 0.7 per cent, its lowest since January 1996, but the pound jumped almost half a cent against the dollar, and short sterling interest rate futures plummeted as dealers bet the figures all but ruled out a rate cut next month.
Expectations of another cut in borrowing costs from 4.5 per cent had already taken a knock this week after minutes of the Monetary Policy Committee's October meeting showed it had not even discussed a rate reduction.
August's figures were also revised up to growth of 0.2 per cent from the flat reading the ONS reported last month. But higher sales volumes may have come at the expense of prices that the ONS said were on average 0.9 per cent lower than a year earlier.
The value of retail sales fell 0.1 per cent on the year, the weakest outcome since records began just after the World War Two.
The ONS said the monthly rise in retail sales was a result of food sales bouncing back but mail-order sales declined sharply.
