British retail sales volumes unexpectedly sank at their sharpest rate in four years in January despite the heaviest discounting in six months, data showed today.
The Office for National Statistics (ONS) said sales fell 1.8 per cent in January, putting them up 3.3 per cent on the year. Analysts had forecast a 0.1 per cent monthly gain after December's 1.1 per cent surge.
The weak data came despite prices being on average 0.4 per cent lower than a year ago, the most negative reading since July last year.
The pound fell half a cent against the dollar, and interest rate futures leapt as investors scaled back their bets on a further rise in borrowing costs after the data came out.
But analysts said the latest fall was just payback after strong sales in December.
The Bank of England left rates at 5.25 per cent last week after three rises since August, but most economists expect the central bank to hike again this year to tame inflation.
The ONS said sales of household goods fell 4.2 per cent on the month in January, the biggest fall in two years.