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Surprise fall in UK retail sales

Official figures show that British retail sales fell unexpectedly by 0.1% in April from March. But the annual rate of growth was 4.2%, the Office for National Statistics added.

Economists had expected a monthly gain of 0.5%.

The figures showed that the sales deflator - a measure of price pressures in the shopping centres - hit its highest level since February 1999. This fuels expectations that the Bank of England will raise British interest rates again in June or July.

Prices were on average 1% higher than a year ago, sharply up from the 0.4% rate in March. Prices were falling much of last year.

The monthly drop in sales volumes was driven by a 3% drop in household goods sales. Electrical items and furniture - which had recorded steep price rises in the month before - were particularly hard hit, indicating that four rate rises since August may be starting to bite.

But the main price rises this month came from food, perhaps because of a poor harvest in Europe. Clothing and footwear also had an upward impact indicating a long period of deflation may be ending.