POLICYMAKERS were warned against further interest rate increases yesterday after retail sales fell to their lowest level since last November. Like-for-like retail sales increased by just 1.2% in July as wet weather and growing pressure on disposable incomes deterred shoppers, according to the British Retail Consortium. BRC director general Kevin Hawkins said: “Given these conditions, the Bank of England should now wait and see what happens over the next few months before doing anything further with interest rates.” The Bank last week voted to hold borrowing costs at 5.75% after five rises in a year but most experts predict that interest rates will hit 6% in the autumn. Torrential rain in July hit clothing and footwear, DIY and gardening sales, although department stores benefited from increased footfall, the BRC said. Although last summer’s World Cup and exceptionally hot July distorted sales patterns, the BRC sales of homewares and furniture slowed during last month despite discounting from retailers. The less volatile three-monthly measure of like-for-like sales growth also fell to 2.1% in the three months to July, compared with 2.5% in the quarter to June. Helen Dickinson, head of retail at accountants KPMG, said: “The two powerhouses behind UK retail – the food and drink and the clothing and footwear sectors, which together account for over half our spending – had a very disappointing month. This is on the back of a similar situation in June.” The BRC survey showed summer fashions continuing to struggle with sales little better than the two-year low seen in May. Food and drink sales were lower than a year ago for the first time since 2000 after the sector suffered from strong comparatives with the World Cup period. Oxford University macroeconomics reader Gavin Cameron said policymakers would have to tread carefully following recent turmoil in financial markets coupled with signs of a high street slowdown. “The bank may have to adopt a cautious approach in the next few months in order to avoid monetary overkill.” | 
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