British retail sales fell in March at their sharpest pace in six months, a survey showed on Wednesday, in another sign that consumers spending is running out of steam after five interest rate hikes in 1-1/2 years. The Confederation of British Industry's monthly distributive trades survey's sales volume balance fell to -9 from +2 in February and well short of retailers' own expectations of a rise to +14. Interest rate futures and government bonds immediately moved higher while the pound fell as dealers bet that the figures would at least delay any further increases in borrowing costs from their current 4.75 percent. Analysts are divided over whether rates will go up again in the summer and even policymakers are still hedging their bets over whether the marked slowdown seen in consumer spending is permanent. Retailers are certainly worried. They are also the most pessimistic about the outlook in six months, predicting only a small improvement in the sales balance to +3. "Some of this poor performance might be attributed to the wintery weather at the start of March and a reluctance of consumers to spend ahead of the budget," said CBI head of economic analysis Doug Godden. "But there is no doubt that sales growth has slowed on an underlying basis since the turn of the year, " said CBI head of economic analysis Doug Godden. The volume of sales for the time of year were the worst since November 1992, the CBI said, suggesting severe weather conditions at the start of the month could have contributed to the poor performance. Furniture and home-improvement stores recorded the sharpest downturn, perhaps as Britain's once-booming housing market shows further signs of slowing. The survey was conducted between March 1 and 16.
