Shoppers in the UK rushed to the high street to scoop up bargains in January, according to industry figures.

The British Retail Consortium (BRC) report for January has like-for-like sales 4% higher than a year earlier.

This is the strongest figure since April 1998.

Bargain-hunters flocked to furniture stores and sought out home improvements, while pharmacies benefited from a bumper month for sales of flu remedies and tissues.

The figures come a day before the Bank of England's Monetary Policy Committee (MPC) begins its two-day meeting to decide where to set interest rates.

There are widespread fears that the MPC will recommend another rate rise, and the BRC figures could give rise to further concern about the economy overheating.

But official figures have shown little indication of rising prices in shops, with retailers generally increasing sales by bringing in mark-downs.

January sales peak

The January figure was the strongest since April 1998 and compares with 2.9% in December.

Total sales - including new store space - jumped 6.5%. The BRC's three-month moving average rose 2.8%, compared with 2.1% a month earlier, showing that the underlying trend is improving.

"The January sales peak appears to have become more pronounced in recent years. Customers have become very adept at timing their purchases to coincide with post-Christmas sales," Andrew Higginson, chairman of the BRC's economic affairs steering group and finance director at Tesco, said.

"This bargainhunter mentality makes it tougher for retailers, who can achieve good volumes of sales but at low margins," he said.

"Tough"

Bridget Rosewell, chief economic adviser to the BRC, said: "The Bank will probably want to put up interest rates but that ignores the fact that retailers are only making extra sales by cutting prices.

"They've had a very weak 1999 and a pretty tough Christmas."

The British Chambers of Commerce - which represents the interests of businesses across all sectors of the economy - has urged the Bank of England not to raise interest rates again.

The deputy director general, Ian Peters, said: "Economic conditions do not support a further hike in interest rates.

"The pound's 14-year high and the fiercely competitive business environment continue to exert downward pressure on prices.

Rate rises "bite"

"There is also little evidence that the UK economy is continuing to accelerate at the pace set before Christmas.

"It is clear from [our] latest economic survey that the MPC's previous rate rises are starting to bite. Welcome signs that domestic consumption and wage deals have stabilised also strengthen the case for keeping rates on hold this month.

"The MPC should be aiming to slow the economy sufficiently to reach a sustainable rate of growth. A further rate increase at this stage risks overkill.

"With three rate rises in the past five months, we believe the only prudent course of action is to pause and take stock."

The BRC Retail Sales Monitor is based on responses from shops accounting for about half of total UK retail sales.