Money: Higher Rates Hit UK Retail Sales

British retail sales tumbled at a record rate in April, according to a survey from industry body British Retail Consortium, and analysts said stocks exposed to confidence about the housing market were particularly susceptible to a fall in expenditure.

But they warned against full-scale panic, highlighting the fact that the timing of Easter, unseasonable weather and general election worries may have inflated the April decline.

An analyst at retail consultant Planet Retail, Bryan Roberts, said "It's not Armageddon by any stretch, but tough conditions will make it harder for ailing retailers."

Sales fell 4.7 percent in April stripping out the effects of new and closed stores, the survey showed.

Britain's long-running consumer boom has been the driving force behind the economy for over the last decade, but a succession of interest rate rises, a cooling housing market and increases in gas and electricity costs have taken a toll on demand.

April's drop is the biggest since the industry group's records began 10 years ago and came after a modest rise in March.

But sales fell by a less dramatic 0.9 percent over the three-month period from February to April.

Nick Bubb of Broker Evolution Securities said "The medium-term outlook is pretty grim, but the sector won't fall in a straight line, and we sense that the current gloom on sector prospects now is a bit overdone."

April's slump follows recent warnings that consumer demand has been declining by UK retailers from fashion clothing chain Next to home improvement group Kingfisher.

Retailers' experiences show the recession has accelerated since December. The UK retail sector has underperformed the wider London stock market by around 11 percent since January this year.

Electrical goods and furniture sales, items most closely linked to the fortunes of the housing market, were hit the hardest, the BRC survey showed.

And analysts said stores selling these items were potentially more vulnerable than others to curbs in spending.