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British retail sales growth fell sharply in June 2014 to one of its weakest rates in three years possibly in response to fears of higher interest rates, according to the report released b y British Retail Consortium (BRC) and KPMG.

Total retail spending in June was just 0.6% higher than a year before, the lowest growth rate since May 2011, excluding Easter distortions.

However, the three-month average is in line with the twelve-month average of 2.5%

On a like-for-like basis, retail Sales, were down by 0.8% in June year-on-year, when they had increased 1.4% on the preceding year.

Over the last three months, food showed almost no total growth while non-food reported growth in line with the twelve-month average of 3.7% over the last four months – which irons out Easter distortions.

Online sales of non-food products in the UK grew 10.6% in June versus a year earlier.

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By GlobalData

The Non-Food online penetration rate was 17.2% in June, 0.9% point higher than in June 2013.

British Retail Consortium Director General Helen Dickinson said, "Consumers continue to benefit from competitive pricing, which may be the cause of softer like-for-like sales in June

"On the other hand, the total value of overall food sales is still in decline but the lower pricing policies we have witnessed are good news for consumers who are set to continue to benefit from keen bargains in their shopping baskets," Dickinson added.

KPMG Retail head David McCorquodale said, "Concern over a potential rise in interest rates is having a dampening effect on retail sales. June saw the brakes applied to spending as shoppers put purchases of big ticket items on hold whilst they waited to see if the Bank of England would take action on interest rates.

"Even sales of home accessories and furniture flat-lined, which is surprising given the UK is reportedly in the midst of a housing boom.

"Clothing retailers fared better, with glorious sunshine driving demand for summer clothes and shoes. These steady sales mean that most fashion retailers have not resorted to the deep discounting we have seen in previous years, and this will help them to hold on to their margins," he added.