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Last Updated: Thursday, 15 December 2005, 10:49 GMT
Strong growth in UK retail sales
Shoppers in London's Oxford Street
The Christmas rush began last month
UK retail sales rose at their sharpest rate in five months during November, with business rising in all sectors, official figures have shown.

Sales grew 0.7% last month, more than double the rate expected, after an upwardly revised 0.4% rise in October.

The increase was driven by a big rise in clothing and footwear sales.

On a quarterly basis, sales were 1% higher in the three months to November on the previous quarter, according to the Office for National Statistics.

Analysts said the figures may dampen chances of a near-term cut in interest rates, although many retailers have cut prices aggressively in the run up to Christmas to boost sales.

November's UK retail figures suggest that High Street spending in the early run-up to Christmas has got off to a very healthy start
Jonathan Loynes, Capital Economics

The ONS figures showed that prices on average were 1.1% lower than a year earlier.

Competition from online firms added to the competitive heat.

"Internet shopping is growing at its fastest rate for 22 months, as millions more shoppers migrate online to buy their Christmas goods," according to Interactive Media in Retailing Group, which represents online retailers.

Tough climate

Big High Street names such as clothing chain French Connection, electrical retailer Dixons and home improvements store B&Q have all complained about tough trading conditions in recent weeks.

Earlier this month, the CBI business group said that confidence among High Street retailers had fallen to its lowest level in least 22 years.

However, last week the British Retail Consortium (BRC) said that the recent spell of cold weather had helped to boost sales, as shoppers sought to stock up on warm clothing.

And department store operator John Lewis said sales soared last week.

"We hit a new record level of turnover last week," said Gareth Thomas, director, retail operations, adding that "84.1m was 7.1% up on last year, and compared very favourably with our previous highest takings of 80.3m before Christmas in 2003".

The Bank of England left interest rates at 4.5% last week, and it has indicated that it is in no hurry to move them until they have more data on the Christmas shopping period which will filter though in January.

"November's UK retail figures suggest that High Street spending in the early run-up to Christmas has got off to a very healthy start," said Jonathan Loynes, economist at Capital Economics.

"Retailers are still having to discount heavily to draw in the shoppers... and the cold weather no doubt played a part."


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