Retail sales data catches City by surprise

Soaring UK retail sales data for May, released today by the Office of National Statistics, and driven by a 9.2% rise in clothing and footwear purchases and a 3.3% leap in food sales, has caught the City by surprise. Major retailers have grown increasingly gloomy this year as the economy has slowed, with many calling on the Bank of England to slash interest rates in order to stimulate the consumer.

"This is without doubt a big surprise and may yet turn out to be a one-off anomaly prompted by the weather or driven by concerns that prices will rise over the coming months," said Ted Scott, manager of the F&C UK Growth & Income Fund.

"The data adds to the likelihood that the next movement in interest rates will be an upward rather than downward one and for now I remain cautious towards consumer-related stocks."