British retail sales volumes stayed the same in August, defying expectations of an increase and boosting expectations the Bank of England will cut interest rates again in the coming months, Reuters reported. The Office for National Statistics said sales were unchanged on the month in August, bringing the annual rate of increase to just 0.8 percent, its lowest since May. Sales in July were now estimated to have fallen by 0.6 percent, not 0.3 percent. The pound fell and short sterling interest rate futures rallied after the much weaker than expected data were released as dealers priced in lower borrowing costs ahead. Economists said that while volumes were undoubtedly dragged lower last month by an unusually large drop in food sales, consumer spending remained weak as soaring petrol and utility costs took their toll on household budgets. "Today's figures are a stark reminder that the high street boom is over and that the next move in interest rates is likely to be down," said Philip Shaw, chief economist at Investec. "They reinforce the message from Next and Kingfisher that current trading conditions are tough." Earlier on Thursday, Europe's top home-improvements retailer Kingfisher said it was grappling with the most challenging conditions in many years with like-for-like sales at its B&Q stores falling 7 percent. And British fashion chain Next Plc reported its worst like-for-like sales in 10 years and said the outlook would probably not improve until borrowing costs came down further.
