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Last Updated: Friday, 18 May 2007, 10:04 GMT 11:04 UK
UK sales robust despite April dip
Fruit and Vegetables in supermarket
An increase in food costs helped drive prices higher
Underlying UK retail sales growth remains robust despite an unexpected fall in April, official figures show.

Over the longer February-April period sales volumes rose 1.2%, against a 0.5% rise in the three months to March.

But High Street sales fell 0.1% during April - against forecasts of a 0.5% rise - leaving them 4.2% higher than at the same time last year.

Analysts suggested the monthly drop may be evidence that recent interest rate increases are beginning to bite.

The ONS added that a 3% drop in household goods sales led the fall, with experts pointing to a sharp increase in prices during March as being a factor in the slide.

Elsewhere, the main driver behind increasing prices was a rise in food costs, which some analysts said may have been down to a poor harvest in Europe.

However, shoppers continued to splash out on items bought online or through catalogues, where sales grew 2.5%, while clothing sales increased 1%.

Price pressures

Meanwhile, the ONS added that the sales deflator, a measure of price pressures, rose to its highest level since February 1999.

On average, prices were 1% higher in April than at the same time a year ago. The rise was stronger than the one seen in March when the rate was 0.4%.

Economists said the news would renew concerns at the Bank of England that companies remain confident about pushing prices higher.

The Bank of England recently raised rates to six year highs of 5.5% in an effort to rein in inflation and curb strong consumer spending.

However, most experts believe that despite the slowdown, the Bank is still preparing to raise rates one more time this year to 5.75% - most probably in June or July.

"The volatility of monthly changes means that the Bank is unlikely to take notice unless a consumer slowdown becomes far more pronounced," said Richard Snook, economist at the Centre for Economics and Business Research (CEBR) think tank.

The ONS figures were broadly in line with data from the British Retail Consortium earlier this month, which showed a slowdown in sales growth.




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