Retail sales volumes stayed restrained in the three months to May, sending annual growth to its lowest level in six years, according to new statistics.
Despite seeing the highest three-month growth in sales since last November, retailers are still mired in the consumer spending slowdown affecting many other sectors of the economy.
The latest report from the Office of National Statistics (ONS) reveals high-street growth 0.3% higher than in the previous three months but far less than the 1.8% recorded during the same period in 2004.
All across the board growth remained flat, with food store sales volumes growing at 0.2%, the lowest rate since March 2003. Non-food stores counted a modest 0.4% which ended their five-month string of decreases. Household goods declined by 1.0%, and non-specialised stores fell 0.6%.
Only clothing stores managed to shine in anticipation of the summer sun, with sales growth topping out at 2.5%.
"Today's news shows that although there is no freefall in UK retail sales, the domestic demand is going to be weak through 2005," said Andrij Halushka, economist at the Centre for Economics and Business Research (CEBR).
"As the data is in line with market expectations, it is unlikely to have serious effect on the markets, apart from bringing marginally lower interest rate expectations."
Most analysts agreed the underlying trend in retail sales growth would remain restrained due to weak income growth, inflationary rises, expectations of tax hikes, pension concerns and a slowing housing market, fuelling further speculation of interest rate cuts sooner rather than later.
Others have argued, however, that consumer spending, while slight, has not collapsed given the modest growth figures. Calls for expedited rate cuts are short-sighted, the urge.
"The Bank of England pointed out that consumers' expenditure on services has remained relatively resilient," said Philip Shaw of Investec Securities. "This suggests that the Monetary Policy Committee is focusing beyond the relatively narrow measure of retail sales and will place more weight on the full quarterly measure of household consumption.
Shaw said that rising incomes and mortgage demands will "underpin" household consumption throughout the rest of this year and should likely dissuade the Bank from cutting rates until 2006.