Sales improve on UK high street

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UK retail sales have risen faster than forecast in November, underlining that consumers are still spending and increasing pressure for a rate rise.

The Office for National Statistics said sales rose 0.3% from October, better than expected but slackening off from a 1% gain the previous month.

The monthly rise took the annual rate of sales growth up to 3.2%, it said.

Fears of an interest rate rise were stoked this week when inflation hit its highest level for almost a decade.

Data combination

The UK pound gained against the US dollar and euro following the release of the retail sales data, indicating that investors expect a rise in interest rates early next year.

"Obviously the combination of data this week backs expectations for a February rate hike," said Jeremy Stretch, market strategist at Rabobank.

Earlier this month, the Bank of England kept rates on hold at 5%, after raising them twice in the preceding four months.

November's gain in retail sales was the third month in a row they have increased, and the longest run of advances since early 1999, the Office for National (ONS) statistics said.

The overall increase came despite a 0.2% drop in food sales, which account for almost half of the total figure.

One of the biggest increases came in mail-order and internet sales, which rose by 2.9% in November from October.