December retail sales defy gloom

Retail sales defied gloomy forecasts

UK High Street sales grew by a stronger-than-expected 0.9% in December, figures have shown.

The Office for National Statistics (ONS) added sales for the three months to December, which irons out monthly fluctuations, were up 1.9%.

However, experts warned that the surge could increase the chances of another rise in interest rates.

The increase in sales reflected a rise in all sectors except mail order retailing, the ONS said.

It added that there was some anecdotal evidence that many retailers had moved their end-of-year sales earlier into December to attract shoppers.

Food sales recovered from a 0.1% dip in November, rising 0.8% last month, while textiles and clothing sales jumped 1% in December after falling 0.9% the month before.

'Picking up'

Analysts suggested the figures - which were accompanied by figures showing the UK economy also grew by a stronger-than-expected 2.1% last month - could trigger a rise in interest rates.

Investec economist Philip Shaw said: "I think we might have another rate hike in couple of weeks."

Ciaran Barr, Deutsche Bank economist, added: "From the Bank of England's point of view it gives them a bit of confidence that the economy is picking up the way they forecast it would.

"It puts pressure on for a February increase in rates (though) I don't think anything's in the bag."