UK Oct. retail sales up for first time in three months

Retail sales in the U.K. rose by 0.5 percent for the first time in three months during October, according to a report by the Office for National Statistics.

Total sales volume was 0.1 percent lower than the same period last year, the report stated. Non-store retailing rose 1.2 percent sequentially in October, and was up 12 percent from the same period last year.

In the non-food stores section, other stores rose the most at 1.6 percent, followed by textile, clothing and footwear during the month.

The rise reversed only half of the drop seen in the previous two months, while the annual growth rate fell into negative territory, Vicky Redwood, an economist at Capital Economics, said in a note.

Sales might be receiving some temporary boost as consumers start to bring forward spending ahead of the VAT rise, which will just store up weakness for the start of 2011, Redwood added.

U.K's economy has been showing signs of slowing down, as the country reported economic growth 0.8 percent in the third quarter, compared with a growth of 1.2 percent in the previous quarter. Inflation also rose in October to 3.2 percent, according to a report on Tuesday.

Inflation remains over the 2 percent target set by the Bank of England for the eighth straight month, causing some concern among the BoE's policy makers.

BoE expects inflation to remain over the target for much of 2011, as import prices as well as VAT increases. The bank has retained interest rates at 0.5 percent and maintain the size of the asset purchase. However, the policy makers continue to remain split three ways over new policies to contain inflation and spur growth, according to the minutes of the latest meeting released by the Monetary Policy Committee on Wednesday.

Sales volume in the three months from August to October rose by 0.1 percent. Predominantly food stores declines by 1.4 percent while non-food stores rose by 1.0 percent, the report stated. Household stores, however, saw a decline by 1.2 percent.

Separately, the Office for National Statistics said that U.K's budget deficit rose during October to 7.1 billion pounds, from 6.9 billion pounds during the same period last year.