High street sales showed signs of resilience today after official figures for April revealed a smaller-than-expected drop in sales volumes.
Retail sales volumes fell 0.2 per cent in April compared to March, official figures showed, their first successive monthly drop for more than two years.
Food and DIY stores were worst hit, with the latter's sector suffering its biggest quarterly sales drop for three years. But booming sales of computer games, such as the latest Grand Theft Auto release and Nintendo's Wii Fit console, helped limit the retailing pain.
Economists had been expecting a bigger overall fall from the Office for National Statistics, in line with recent gloomy trade surveys. They warned high street sales would have to worsen considerably before the Bank of England's Monetary Policy Committee (MPC) considered making a rate cut.
Vicky Redwood, UK economist at Capital Economics, said April's fall was "modest" and pointed to the "extremely healthy" annual sales growth rate of 4.2 per cent. This was much better than the 1 per cent rise flagged up by the British Retail Consortium this month.
Ms Redwood said: "The MPC thinks that a high street slowdown is required to keep a lid on price pressures. So unless sales growth really starts to tank, we are going to have wait a while for the next interest rate cut."
Retail sales volumes during the three months between February and April were up 1.5 per cent, a slight drop from the 1.9 per cent seen in March.
There was evidence that a slowing housing market was dragging on sales growth after household goods stores, including DIY shops, suffered a 1.9 per cent sales drop. This was the biggest fall for three years.
The best performing sector by far was "other stores", which includes entertainment shops such as Zavvi and HMV. They enjoyed 5.3 per cent sales growth in the past quarter, the biggest rise since records began in 1986.
Howard Archer, chief UK economist at Global Insight, said the 1.5 per cent overall rise was "hard to believe".
He said: "Taken at face value, the retail sales data suggest that the consumer is only gradually and reluctantly reining in his spending despite facing serious headwinds. Nevertheless, we suspect that consumers' resilience will be increasingly eroded by these headwinds over the coming months."