By  on August 21, 2014

LONDON (Reuters) — British retail sales grew in July at the slowest annual rate since November last year, data showed on Friday.

The figures add to signs that Britain's consumer-led recovery might be starting to slow.

Monthly growth in retail sales volumes fell to 0.1 percent in July, down from 0.2 percent in June and bucking forecasts for a rise to 0.4 percent.

Annual growth in the volume of goods sold dropped to 2.6 percent, the weakest since November last year and below forecast, despite prices falling at their fastest rate in almost five years, giving consumers more for their money.

"Today's release provides further evidence that economic expansion in the U.K. is slowing," said Rob Harbron, senior economist at economics consultancy CEBR.

"A more measured rate of growth is expected ... as households continue to face relatively sluggish real wage growth, the Bank of England starts to tighten monetary policy, and the government is required to make sharp fiscal cuts to bring the deficit under control," he added.

The Office for National Statistics said the biggest downward pressure on retail sales came from non-store retailing and petrol stations, and some economists said the retail data looked healthier once fuel sales and monthly volatility were stripped out.

Britain's consumers have been the main driver of the country's economic recovery which began last year, helped in part by low inflation that has eased the pressure on their spending power.

Wage growth, however, remains very weak and increased spending has been funded in part by households cutting back on how much they save.

Prices in stores fell 0.9 percent on the year after being flat in June, the biggest decline since August 2009, the ONS said. However, household budgets are squeezed by higher prices for other goods and services, with the broader consumer price inflation measure rising by 1.6 percent in July.

A survey from the British retail Consortium earlier this month showed British annual retail sales growth quickened in July.

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