Waning boom may hold off interest rate rise

Britain's long consumer boom appears to be running out of steam, according to government figures, increasing the likelihood that the Bank of England will delay an interest rate rise.

Retail sales rose 0.1% in March, below analysts' forecasts, trimming the annual rate of growth from 5.8% to 5.6%.

Ross Walker, UK economist at Royal Bank of Scotland, said: "These data will strengthen the Bank's case for keeping rates on hold in the near term - probably until August."

Robust consumer spending helped Britain to weather the global downturn last year and turn in the highest growth of the big economies. This worried the Bank, which believes consumer spending must moderate to make room for the government's boost to Whitehall budgets.

Within the retail figures, the star performer continued to be textile, clothing and footwear stores, which registered a 0.9% jump in March, to stand 12.9% up on a year ago.

Stores achieved higher sales through aggressive discounting, suggesting that "even if sales growth were to remain strong, it will not automatically add to pressure to raise interest rates", according to Daniel Kaye of Capital Economics.