UK retail sales hit two-year high

British retail sales rose at their fastest annual rate in over two years in July as a heatwave boosted sales of barbecue food and outdoor items, adding to signs that third-quarter growth has got off to a strong start.

Retail sales volumes jumped 1.1% on the month — almost twice as fast as expected — to give an annual rise of 3%, the highest since Jan 2011, official data showed yesterday.

Ten-year gilt yields briefly returned to a near two-year high after the data, as traders speculated the economy might recover faster than the Bank of England expects, triggering an earlier-than-planned interest raterise.