High street sales remained robust last month as trade in clothing picked up, a report showed yesterday, allaying fears that the interest rate rise expected tomorrow would knock sales off course this Christmas.

The figures from the British Retail Consortium (BRC) were stronger than expected and offset concerns for the retail sector caused by a downbeat survey from the CBI last week.

The Bank of England’s Monetary Policy Committee (MPC), which starts its monthly two-day meeting today, is expected to raise rates to 5 per cent and analysts said that the sales data would only encourage them.

However, Kevin Hawkins, director-general of the BRC, said that he could see “no case” for a rate rise. “Sales growth remains on the same restrained level as in previous months,” he said.

Total sales were up by 5 per cent in October compared with a year ago, down from 5.2 per cent in September, but like-for-like sales, a measure that strips out changes in floorspace, rose by 2.6 per cent, compared to a 2.4 per cent figure for the previous month. By either measure, the high street had a better October than in any of the three previous years.

Ross Walker, of RBS Capital Markets, pointed to the strength of sales at John Lewis and Marks & Spencer and said that the official data was more likely to reflect the BRC’s optimistic picture than the CBI’s. “Official demand is still fairly resilient,” he said.

Data on jobs released yesterday will be further grist to the mill of the MPC’s rate hawks. The Recruitment & Employment Confederation and KPMG’s October Report on Jobs showed that permanent staff placements reached a 30-month high in October, as it reported that shortages of skills in the workplace were easing. As a result, it said, “upward pressure on pay remained marked”, with salaries continuing to rise at a five-year high.

Nevertheless, the Voca take home pay index found that disposable income growth slowed sharply in October.

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