HOPES of a new year rate cut have taken a knock after figures showed shoppers were out in droves on the high street.

According to data by the Office for National Statistics, retail sales volumes were 1.3 per cent above the level seen in October - the biggest monthly increase since January 2000.

On a yearly basis, volumes were 7.1 per cent higher than November 2000, the strongest annual improvement since May 1988.

David Page, economist at Investec, said the jump was "a major surprise".

But he added: "Don't forget interest rates are at a record low the consumer, although very aware of the grim economic outlook on a global basis, is very confident about their own personal finances.

"Unemployment is going up, but historically, it is still very low. A lot of people are in work and seeing job security going forward."

Speculation had been mounting that tumbling inflation and a recent interest rate cut in the US meant the Bank of England would trim rates again in January.

But Mr Page said the improvement on the high street strengthened the case for holding interest rates steady.

The growth on the high street during November was mostly driven by a surge in clothing sales, as shoppers waited until the temperature dropped in November to stock up on warmer winter clothes

The figures also received a boost as people geared up for Christmas, while demand for household products also improved.

Between September and November sales volumes were 1.6 per cent higher than in the previous three months and 6.4 per cent higher than a year ago.

Gwyn Hacche, economist at HSBC, said a "cocooning effect" could be helping the figures, with consumers in an uncertain political climate choosing to splash out on their homes rather than overseas travel.