UK retail sales growth fell to its lowest level in two years last month, in a sign that the key Christmas trading period may disappoint the High Street.

This is further evidence that consumer spending is hardly out of control no matter what the concern on house prices

Bridget Rosewell, BRC chief economic adviser

Sales in stores open for at least one year were up 2% in November compared with the same period in 2001, while total sales rose 4.9%, according to the latest figures from the British Retail Consortium (BRC).

Like-for-like sales during the three months to November fell to 3.4% from 4% in the three months to October.

The BRC said the decline in the three-month trend rate partly reflected November's wet weather, which kept many shoppers at home.

It added that the year-on-year comparisons were disappointing because recent interest rate cuts had fuelled exceptionally strong retail sales growth in November 2001.

More rate cuts needed?

The organisation said weak sales over Christmas - the busiest and most lucrative season in the retail calendar - would reinforce the case for further rate cuts in the new year.

"These are the slowest results for two years," said the BRC's chief economic adviser Bridget Roswell.

"This is further evidence that consumer spending is hardly out of control no matter what the concern on house prices."

The Bank of England has kept interest rates on hold at 4% for 13 months despite growing pressure for a cut to reinvigorate the flagging manufacturing sector.

Policy dilemma

The Bank fears that further rate cuts could stoke up the UK's already booming property market, increasing the risk of a destabilising house price crash in the months ahead.

Persistently strong consumer spending has helped to insulate the UK economy against weak global growth in the last two years.

The shopping spree has been fuelled in part by the housing boom, with many homeowners financing their spending by borrowing money against the rising value of their houses.

However, some analysts have predicted a fall in consumer spending amid growing global economic uncertainty linked to fears over war in Iraq.