Retail sales weakest for a year

Data from the British Retail Consortium (BRC) revealed that like-for-like retail sales in the UK rose by 1% in October - the weakest growth since last November.

Figures from the monthly survey will reinforce the case for an interest rate cut coming just a day after data showed a sharp drop in manufacturing output and a surprise softening in the services sector.

Rate setters at the Bank of England are set to begin their two-day meeting to decide on interest rates on Wednesday.

The latest retail figures could put further pressure on the Bank's nine-strong Monetary Policy Committee to ease rates back from 5.75%.

The BRC's latest snapshot of the health of the high street showed that retail spending slipped dramatically since September, when like-for-like sales rose by a stronger-than-expected 3%.

Price cuts helped give shoppers a boost in September with the colder weather aiding sales of warmer clothing and footwear. But last month saw clothing sales stall and consumers put off buying big items.

BRC's survey experts said the October figures suggested consumers were tightening their belts after the five rate hikes since last August and amid signs the housing market is slowing.

The banking crisis that saw Northern Rock suffer the first bank run in nearly 150 years may also have dented confidence, according to the BRC.

Expectations for an imminent interest rate cut had decreased in recent weeks after the economy showed robust growth and economists had pushed back hopes for a reduction to next year at the earliest. However, Monday's manufacturing and service sector figures have led economists to believe a cut was back on the table as a realistic option.