British retail sales rose at the fastest annual rate in two years in May as sunny days tempted Britons to go shopping.
The Office for National Statistics in Britain said today that May sales gained 0.8 per cent on the month, marking a full year of no monthly pullback in sales, something which has not happened since comparable records began in 1986.
Economists had expected a 0.6 per cent gain. On the year, sales were up 7.4 per cent, the fastest rate since April 2002.
The figures lifted expectations that the Bank of England (BoE) will raise interest rates again sooner rather than later, with short sterling interest rate futures plunging across the strip and the pound adding to earlier gains against the dollar.
"The surge in retail sales in May, despite an interest rate hike early in the month, highlights how unperturbed consumers were by the BoE's gradualist approach to raising interest rates," said Mr Howard Archer, economist at Global Insight.
The BoE has already boosted rates by one percentage point since November and markets expect at least another half point by the end of the year.
The three-month rate, which is a better measure of the trend in retail sales, was also strong, up 1.7 percent compared with the previous three months.
The ONS said warm weather in May had pushed up sales of clothing, gardening equipment and plants and outdoor furniture.
Sports shops also reported a surge in sales, the ONS said. England shirts were likely a hot item ahead of the Euro 2004 soccer tournament in Portgual.