Britain’s retail sales soared in April, official data shows, as the Bank of England appeared a step closer to raising its record low interest rate.
Retail sales, a key indicator of household spending confidence, surged 6.9 per cent compared with April 2013, the Office for National Statistics (ONS) said in a statement on Wednesday.
April’s year on year retail sales growth was the fastest for a decade and signaled that Britain’s economic recovery has picked up more speed in the second quarter.
In reaction, the pound soared to a 16 month high against the European single currency, and it also briefly spiked above $US1.69.
Separately on Wednesday, minutes from the Bank of England’s latest meeting hinted at policymakers edging towards hiking its key lending rate from 0.50 per cent, where it has stood for more than five years to aid Britain’s economic recovery.
The country’s growth powered ahead in the first quarter with gross domestic product of 0.8 per cent, but there are rising concerns about its recovering housing market amid fears of a potential bubble in London.
Analysts said Wednesday’s data would put pressure on the Bank of England to consider raising its main interest rate, which plays a role in the level of borrowing costs that retail banks demand in return for home loans.
The BoE’s decision to keep its rate on hold at its May meeting was “becoming more balanced” for some members of the nine strong monetary policy committee, the minutes said.
Analysts read this to mean that there was an increase in support towards tightening borrowing costs.
But with British inflation holding below the BoE’s 2.0 per cent target level, policymakers were keen to leave the interest rate on hold, for now at least.
The nation’s 12 month inflation rate accelerated in April for the first time for 10 months, lifted by the later timing of Easter, data showed on Tuesday.
The Consumer Prices Index (CPI) inflation measure ticked up to 1.8 per cent, after striking a four year low of 1.6 per cent in March.
The BoE has stated that it will not consider raising interest rates until all the spare capacity, or slack, in the economy has been absorbed.
AFP
