LONDON, Dec 18 - Retail sales growth in Britain slowed sharply last month to its weakest since July, official data showed on Thursday, hinting that the consumer might be responding to the Bank of England's interest rate hike early in the month. The Office for National Statistics said sales grew just 0.1 percent on the month, after three months of very strong growth, to give an annual growth rate of 3.7 percent. The ONS said the slowdown was particularly marked in the non-specialised stores -- mainly department stores -- and textiles, clothing and footwear sectors. The data, which were in line with analysts' forecasts, chime with weak survey evidence from the British Retail Consortium and the Confederation of British Industry. Economists say, however, that it is too early to say definitively that slowing income growth has hit consumption. It could be that the mild weather and rugby World Cup last month hit spending, although the ONS said retailers had not mentioned either as factors.
The three-monthly growth rate, which irons out monthly fluctuations, showed a rise of 1.4 percent from the previous three months and an annual rate of 3.8 percent. Both numbers were robust. The ONS also released public finance data showing a smaller-than-expected public sector net cash requirement of 5.8 million pounds last month. It also reported the underlying measure of the public finances, called public sector net borrowing, showed a shortfall of 5.52 billion pounds, also smaller than analysts had expected. Chancellor of the Exchequer Gordon Brown last week hiked his forecasts for this fiscal year's deficit to 37 billion pounds, an increase of 10 billion on the forecast he made in his April budget. Thursday's data showed the deficit for the year to date running at 28.74 billion pounds, compared with 17.67 billion in the same period a year ago. November is traditionally a big month for spending and weak month for receipts, however, so further months are likely to show smaller shortfalls.//