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Thursday, 20 June, 2002, 11:59 GMT 12:59 UK
UK retail boom falters
French Connection shop
Clothes stores saw sales fall
The British shopping boom has stalled, in a sign of the challenges still facing the UK economy.

Retail sales slid 0.6% last month, the Office for National Statistics said.

The fall, which was larger than analysts had expected, reflected poorer sales by clothing and shoe stores, the ONS report showed.

And it comes as a series of reports have signalled caution over the strength of the UK economic revival, with the Royal Institution of Chartered Surveyors on Thursday suggesting that the first signs of a slowdown in the property market are appearing.

The data will ease pressure on the Bank of England to raise interest rates to counter the risk of inflation.

Calculation headache

While the decline was the steepest for more than two years, many analysts cautioned against interpreting it as the end of a High Street boom which has been credited with saving the UK economy from a more serious slowdown.

The sales fall followed sharp growth, revised upwards to 1.8%, in April.

And the ONS said the fall of bank holidays could have affected the May figure.

Glenn Davies at Credit Lyonnais said: "It is still difficult to work out what the trend is."

John Butler, economist at HSBC, said of: "A small fall should not be taken as an indication that consumer spending has started to slow."

George Buckley, analyst at Deutsche Bank, said: "The report does suggest consumption growth is easing, but not overly-aggressively."

Weather factor

Observers said the fall in clothing and footwear sales, from an average of 155.8m in April to 147.7m last month, could reflect the poor weather.

Sunny spring weather was credited with the strong April clothes sales figure.

Will the UK economy feel the impact of the US slowdown?

Economic indicators

Analysis

UK rate decisions
See also:

20 Jun 02 | Business
13 Jun 02 | Business
23 May 02 | Business
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