Christmas comes early on the high street as retail sales show a surge

Consumers continued to pound the high street in their droves in October, reinforcing their position as the powerhouse of the otherwise listless UK economy.

The Office for National Statistics (ONS) said retail sales volumes rose by 0.8 per cent in October from September, and were up by 6 per cent compared with the same period a year earlier.

The trend suggests it will be another bumper Christmas for retailers. But analysts believe this level of spending will probably not be sustained in the new year, making it likely that the Bank of England will reconsider lowering interest rates in an attempt to help struggling manufacturers. David Page, an economist at Investec, said: "The consumer has been resilient but there is little to give added support now, with confidence slipping, unemployment likely to rise modestly and interest rates not going to boost consumer spending."

These circumstances, Mr Page said, made it possible that "the UK consumer will finally slow to longer-term historic levels early next year".

The annual growth rate was the strongest since April this year and was twice as high as most analysts predicted. The rebound came after consumers have over the last six months showed signs of slackening their pace of buying.

ONS said sales of clothes and shoes were particularly strong, partly due to the fact that shoppers returned to the high street after an unseasonably warm September put them off buying winter stock.

The fresh increase in spending reinforced expectations that the Bank of England would not cut interest rates next month. The Bank has indicated that it fears consumer spending and house prices are already overheating, with individuals ratcheting up huge amounts of debt that they may not be able to pay back if unemployment rose or interest rates were hiked.

Part of the spending frenzy has been attributed to the fact that prices have mainly stayed the same or slowed on the high street. ONS's measure of prices fell back to -1.0 per cent in October from 0.9 per cent in September.

But mainly the spending boom has been fuelled by consumers being willing to take on increasing amounts of debt, partially against the inflated value of their homes.

Consumer credit topped £2bn in September and the British Bankers' Association said on Wednesday that lending by the major banks rose by an underlying £1.1bn in October.

Consumers in other parts of Europe have shown they are unwilling to rack up debt. French consumer spending jumped 1 per cent in October, but this was seen mainly as a bounce back from a 0.9 per cent drop the month before.

In Germany figures for the economy as a whole indicated consumers had shored up weak growth, with a 0.3 per cent rise in third-quarter GDP compared with the previous month.

In Italy consumer confidence slowed to its lowest level in more than five years. Taken together, analysts said the figures reinforced the need for the European Central Bank to cut interest rates, because most of Europe's main economies need to be boosted and there appears to be little risk of the consumer sides of their economies overheating.