UK retail sales fell by less than expected during April, reducing the chances of a short-term interest rate cut in the face of rising inflation and consumers' reluctance to rein in spending.

According to the Office for National Statistics (ONS), the volume of retail sales fell by 0.2 per cent in April, which is the second consecutive monthly decline following March's 0.4 per cent slide, but is better than the 0.5 per cent drop the market had expected.

From February to April, retail sales volume rose by 1.5 per cent compared to the previous three months, with the volume of sales from food stores up by 1 per cent and from predominantly non-food stores up 1.7 per cent. Compared to the same period last year, sales volume rose by 4.8 per cent.

The value of sales also increased, up 4.3 per cent between February and April compared to the same period last year.

Howard Archer, chief UK and European economist at Global Insight, said: "Taken at face value, the retail sales data suggest that the consumer is only gradually and reluctantly reining in his spending despite facing serious headwinds. Nevertheless, we suspect that consumers' resilience will be increasingly eroded by these headwinds over the coming months."

Yesterday, minutes from the Bank of England Monetary Policy Committee's (MPC) meeting at the beginning of May revealed the depth of concern about headline inflation which hit 3 per cent in April, and is widely expected to increase this year.

An overwhelming 8-1 majority of MPC members voted in favour of keeping borrowing costs at 5 per cent, after three rate cuts since December 2007, arguing that a cut "would make it more difficult to keep inflation expectations in line with the target."

Mr Archer said: "...[today's] data does little to revive hopes of a near-term interest rate cut, especially as the Bank of England believes that some slowdown in spending is necessary over an extended period to dilute current elevated inflationary pressures."

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