Retail sales in June slumped at the fastest pace in more than 20 years, after trading in food stores fell at record rates.

Official figures show that the volume of sales fell by 3.9 per cent in June – the largest monthly decline since records began in 1986 – taking the annual growth rate to 2.2 per cent.

Analysts had expected retail sales volume to decline by 2.5 per cent in June, following May’s surprise rise of 3.5 per cent.

Trading volumes in food shops declined by 3.6 per cent – the largest fall in 22 years – while sales in predominantly non-food stores also dropped sharply, by 4.5 per cent.

However, economists said that the monthly fall in June may give an unclear impression.

Howard Archer, chief UK and European economist at Global Insight, the economic consultancy, said: "The correction in retail sales in June was so marked that it more than wiped out May's surge.

“Clearly, just as May's reported sharp growth in retail sales over-stated the strength of sales that month, so June's largest fall on record overstates the weakness."

The Office for National Stastistics, which was criticised over May's figures that appeared to be at odds with other surveys, said that monthly data was volatile, and that three-monthly figures gave a better idea of trends.

But sales volume in three months to the end of June also show a slowdown in consumer spending, as more people grapple with higher utility, fuel and mortgage bills.

Sales rose by 0.6 per cent in the three months to June, behind a 1.7 per cent rise in the first quarter of the year.

However, sales were 4.4 per cent higher in the three months to June compared with the same period last year.

Mr Archer said the prospects for consumer spending in the coming months were "pretty bleak".

But Vicky Redwood, of Capital Economics, said the figure could raise hopes that the Bank of England’s Monetary Policy Committee will keep the interest rate at 5 per cent if it is satisfied that falling sales will prevent retailers from passing on their increased costs to customers.

"This will reduce the chances that Tim Besley will muster a majority for a rate hike next month," she said.

The minutes of the Bank of England's rate-setting committee, published yesterday, showed that Mr Besley voted for a rate rise earlier this month, while a majority of seven of his colleagues voted to keep rates on hold.

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