By Matt Falloon and David Clarke

LONDON (Reuters) - An early summer heatwave sent Britain on a shopping spree in May, driving retail sales up at the sharpest pace in more than two decades, boosting expectations the Bank of England will raise interest rates.

Policymakers, so far, have signalled they are in no rush to hike rates, despite inflation fears, because the economy is expected to slow sharply as the credit crunch feeds through to households.

The Bank expects consumer spending to tail off as pay growth stalls and banks clamp down on lending, but official retail sales data on Wednesday defied all expectations -- showing a 3.5 percent leap in volumes during May.

That was the strongest since the series began in 1986 and left analysts, who had expected a slight fall, dumbstruck.

"I'm staggered," said Philip Shaw, chief economist at Investec. "The figures are on a completely different plane compared to what markets were expecting."

Official sales data has been surprisingly strong this year, puzzling policymakers and deviating from weaker evidence elsewhere.

But the longer the official numbers defy expectations, the more confident markets will grow in betting on higher interest rates.

Record sales of food and clothing, undoubtedly helped by the hottest weather for May on record, contributed most to the knockout performance -- but there was strength across the board.