Retail sales surprisingly soared in Britain during May to show the biggest monthly gain for 22 years, official data showed Thursday, as consumers shrugged off the credit crunch to spend more on clothing and food.
Economists were surprised by the data because it painted a rosy picture of the British retail sector, despite high inflation, a faltering housing market, slower economic growth and the ongoing impact of the global credit squeeze.
The Office for National Statistics said that retail sales on a monthly basis leapt by 3.5 percent in May from April.
That was the biggest monthly jump since 1986 and defied market expectations for a monthly drop of 0.1 percent.
"The release of May's retail sales numbers stunned UK markets, showing a gargantuan 3.5 percent leap in volumes on the month," said Investec economist Philip Shaw.
Retail sales jumped by 8.1 percent in May, compared with the figure for the same month in 2007, the ONS added. Analysts had pencilled in a gain of 4.1 percent.
"May's whopping rise in UK retail sales will certainly keep talk of possible interest rate hikes alive," said Capital Economics analyst Ben May, who however cautioned that the monthly readings were "fairly volatile."
He added: "Given the backdrop of sharply rising inflation and plummeting confidence, we continue to think that the official sales figures should be taken with a pinch of salt."
Royal Bank of Scotland economist Ross Walker agreed that the forecast-busting data could point towards a rate hike from the Bank of England (BoE) some time soon.
"The odds of a rate hike in the next month or two just got a lot shorter," Walker said.
Earlier this month, the BoE held its key interest rate at 5.0 percent in a move seen by analysts as dampening high inflation despite slowing economic growth.
However, data showed this week that British inflation hit a 16-year high of 3.3 percent in May, driven by soaring food and energy costs prices.
The British central bank's chief task is to keep 12-month inflation close to a 2.0-percent target.
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