Online shopping boosts retail sales

By Sumeet Desai and Fiona Shaikh

LONDON (Reuters) - Retail sales rose more than expected in November as internet shopping surged at its fastest rate in more than a year, suggesting consumer demand is still holding up in the face of a housing market slowdown.

Sales rose 0.4 percent last month, the Office for National Statistics said on Friday, twice the rate predicted by analysts, putting them up 4.4 percent on the year. Food stores and the non-store retailing and repair category led the charge.

The latter, which includes specialised internet retailers like amazon.co.uk rose by a whopping 5.9 percent on the month -- the biggest jump since August 2006 -- in a sign that high street stores complaining about poor demand may simply be losing market share to online retailers.

"Actual spending is not falling out of bed, and for anyone unlucky enough to be shopping in London last night, the crammed shops showed little evidence of a consumer recession," said Daragh Maher, a strategist at Calyon.

But there was other evidence on Friday the consumer mood is souring, even after the Bank of England cut interest rates this month.

The GfK/NOP consumer confidence index fell to its lowest since the Labour government came to power in 1997, adding to the gloom for Prime Minister Gordon Brown who is trailing badly in opinion polls.

The survey also showed consumers more reluctant to buy big-ticket items like televisions than at any time since the recession of 1991.

SLOWDOWN AHEAD