Womenswear sales suffered in the bad weather

Like-for-like sales were up 1.8% last month compared with a year earlier, down from a 2.4% increase in June, the British Retail Consortium (BRC) said.

It added that as well as rates denting consumer confidence, sales had fallen back following June's Euro 2004 boost.

"The impact of... rate rises in dampening consumer confidence is beginning to come clear," the BRC said.

Total sales, which include new floor space, were up 4.3% in July compared with a year earlier, against 5% growth seen in June.

(The Bank of England) needs to refrain from any further rises unless it wants to further test fragility of the consumer economy Kevin Hawkins, British Retail Consortium

The BRC said that with demand remaining "sluggish" the main driving force behind July's sales had been promotional sales - with price cuts helping to clear stocks.

But wet weather early in the month took its toll, with sales of womenswear only picking up towards the end of July as the weather improved.

Rates warning

Menswear and men's shoe sales performed less well, but followed a similar pattern, the BRC added.

TV sales and trade in ready meals and beer also fell off following June's football-related boost from the Euro 2004 competition in Portugal.

As a result, sales growth for the three months to July eased to 2.6% from 2.7% in the three months to June.

The BRC said that the Bank of England's desire to cool the housing market with a series of rate rises was already having "unnecessary and unwanted consequences" on the High Street.

"It needs to refrain from any further rises unless it wants to further test fragility of the consumer economy," BRC director Kevin Hawkins said.

Last week, the Bank of England raised rates for the fifth time since the start of November to 4.75%.

The BRC data supports recent figures from the Confederation of British Industry which also showed retail sales growth easing in July.