Thursday June 14, 12:10 PM
British retail sales climb in May
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LONDON (AFP) - Britain's retail sales rebounded in May after a slight fall in April, buoyed by strong demand for household goods, official data showed Thursday.
Analysts said the news pointed towards another interest rate rise from the Bank of England (BoE) in the next few months, after the central bank froze borrowing costs at 5.50 percent last week.
The Office for National Statistics said on Thursday that retail sales rose by 0.4 percent in May from April, when they had dropped by 0.1 percent on a monthly-basis.
They jumped by 3.9 percent in May compared with the same month in 2006, the ONS added. Both the monthly and annual figures tallied with analysts' consensus forecasts.
The ONS said the biggest increase to retail sales in May occurred in household goods stores where sales climbed by 2.9 percent on a monthly basis following a fall of 3.2 percent in April.
"Overall, the data do little to dilute expectations that the BoE will lift interest rates by a further 25 basis points to 5.75 percent by August at the latest," said Global Insight economist Howard Archer.
He noted that the retail sales showed resilience in the face of bad weather in May, and despite four quarter-point interest rate hikes since August 2006.
"This will be of concern to the BoE, as (governor) Mervyn King has stressed that the bank is looking for consumer demand to slow in order to ease underlying inflation pressures," said Archer.
King had warned on Monday that the central bank may have to hike rates again.
His comments overshadowed news on Tuesday that British 12-month inflation slowed to the weakest pace for seven months in May as lower domestic energy prices sparked the second monthly drop in a row.
Last week the BoE froze interest rates at a six-year high of 5.50 percent as it took stock of a quarter-point increase in May that was aimed at keeping a lid on inflation.
- Office for National Statistics (ONS) (Official retail sales report by the ONS )
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