British retail sales rose at their sharpest rate in five months in November, in a further sign that consumer demand is picking up and boding well for the key Christmas shopping season.
The Office for National Statistics said that sales rose 0.7 per cent last month after an upwardly revised 0.4 per cent in October.
This was more than double analysts' forecasts and took the annual rate to 2.1 per cent.
The pound gained a quarter cent against the dollar and interest rate futures fell as the figures dented expectations of further cuts in borrowing costs, but economists noted that retailers were still having to cut prices aggressively.
"Pretty healthy retail sales growth in November reinforces the belief that consumer spending is picking up to some extent, and reduces the case for a near-term rate cut," said Howard Archer, economist at Global Insight. "Even so, the data indicates that many retailers still feel significant discounting is still needed to boost sales volumes."
Companies 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.
The ONS data showed prices on average were 1.1 percent lower than a year earlier.
The November jump in sales was driven by clothing and footwear shops. Their sales increased by 3.6 percent - the highest monthly increase in more than a year - perhaps as temperatures dived after a relatively mild October.
Bank of England policymakers have also been forecasting a recovery in consumer spending after a sharp slowdown at the start of the year. They left interest rates at 4.5 percent last week and have indicated they are in no hurry to move them until they have more data on the Christmas shopping period and New Year wage round.