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Thursday, December 17, 1998 Published at 10:30 GMT


Business: The Economy

Surprise recovery in UK retail sales

Retailers say they have a torrid time, but figures suggest otherwise

UK retail sales have bounced back in November, bringing a welcome Christmas present to the beleaguered sector.


Rory Cellan-Jones reports
The figures, released by the Office for National Statistics, contradict gloomy industry surveys, which had suggested that the retail sector was about to slide into recession.

During recent weeks major retailers had issued profit warnings, which seemed to support suggestions of a marked slowdown on the High Street.

Successive cuts in the UK cost of borrowing appear to have prompted shoppers to part with their money in the pre-Christmas shopping rush.

Rate cut hopes fade


[ image: At last retailers receive some Christmas cheer]
At last retailers receive some Christmas cheer
However, the rise in High Street sales may put an end to the Bank of England's drive to lower interest rates.

Philip Shaw, chief economist at financial group Investec said: "The fact that retail sales volumes have posted an increase in November is a major surprise and runs contrary to both survey and anecdotal evidence that we have seen over the last couple of weeks. The implication for monetary policy is that the MPC (the Bank of England's Monetary Policy Committee) will not be keen to rush into another rate cut at its meeting in January."

Retail sales volume rose 0.8% in November, compared to the previous month. Sales volumes are up 2.5% compared to a year ago.

The figures are far better than City analysts had expected; they had actually predicted a further retail slump.

UK interest rates were cut by 0.5% to 6.25% earlier this month.



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