UK Retail Sales Rise More Than Expected in Sept

British retail sales rose much more than expected in September at their sharpest annual rate in three years, official figures showed on Thursday.

The figures were boosted by strong toy and games sales and will likely dent expectations of imminent interest rate cuts as it suggests the consumer is not taking fright from the turmoil in financial markets.

The Office for National Statistics said sales rose 0.6 percent last month, well above forecasts for a 0.1 percent rise. That took the annual rate to 6.3 percent, its strongest since Sept. 2004.

But the gains came with heavy discounting by retailers with the deflator at -1.5 percent, the most negative since Jan. 2005.

Separately, the ONS said the public sector posted a net cash requirement of

8.964 billion pounds last month.