British retail sales fall unexpectedly

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Retail sales in Britain fell for the first time since January last month, official data showed on Thursday.

The unexpected drop of 0.5 percent compared with a rise of 0.8 percent in July, the Office for National Statistics said in a statement. July's figure was revised down after an initial reading had shown a jump of 1.1 percent.

The ONS added that retail sales climbed 0.4 percent in August compared with 12 months earlier.

Market expectations had been for a monthly gain of 0.3 percent and a year-on-year increase of 0.2 percent in August, according to a survey by Dow Jones Newswires.

The data, which came a day after an unexpected rise in British unemployment, weighed on the London stock market and British pound. Analysts said consumers were showing caution before a round of major spending cuts by the government.

"The unexpected 0.5 percent fall in retail sales in August is a nasty shock and deals a significant blow to growth hopes," added Howard Archer, economist at the IHS Global Insight consultancy.

"Indeed, it will likely fuel fears of a double dip (recession), given the importance of consumer spending to the economy and the fact that the fall in sales were broad-based in August."

© 2010 AFP

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