Sales in the past two months stalled at Darty, dragging its interim like-for-like sales growth back to 1.8 per cent. Shares in Kesa, which used to be part of Kingfisher, fell 8.25p to 259.75p. Jean-Noel Labroue, the chief executive, said its performance reflected the "deteriorating retail conditions across our markets", adding that the group was taking steps to "manage margins and streamline its organisations" before the all-important second half.Kesa will seek to take costs out of its back-office and supply chain, but is not planning redundancies, a company spokesman said.Comet was up against a tough comparative period, when sales of televisions soared before Euro 2004, and will make a loss during the first half. Analysts treated the trading update as a second profits warning and cut forecasts. UBS, its joint broker, cut pre-tax profit estimates by 8 per cent to £167m.

It said underlying sales at Comet had fallen 5 per cent in its half year to 18 July, implying an 8 per cent slide in the past 11 weeks. Kesa Electricals warned yesterday trading at Comet, its core UK chain, had deteriorated, sending its shares down sharply. "Moving rates once and then waiting and seeing would go against that philosophy."Ian Stewart, an economist at Merrill Lynch, warned that retail sales were "erratic, highly seasonal and prone to revision". He added: "The market and [City] consensus are now locked on to an 4 Augustrate cut and we'd need very strong data surprises or signals from the Bank to change that."Meanwhile, figures from the Inland Revenue showed that the number of property transactions rose by 3,000 to 123,000 in June, providing further evidence that the housing market was stabilising..

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"Historically the Bank likes to identify a trend - up or down - and then respond with a series of moves in rates," he said.

Retail sales values also rose strongly in June."Mr Batty said even if the Monetary Policy Committee were to cut rates next month, yesterday's data had thrown further rate cuts into doubt. Ben Broadbent, at Goldman Sachs, said: "This isn't just discounting. "It is a contrasting picture," Nick Palmer, the ONS retail statistician, said.Although the ONS said department stores appeared to have brought forward their sales into June, prices on average fell just 0.6 per cent on an annual basis, the smallest price cut since August 2003. "The five members who did not want a rate cut last month could stick to their positions," he said.The financial markets, which had expected another anaemic rise of some 0.2 per cent, reacted with surprise, pushing up sterling and gilt yields.The Office for National Statistics said the growth in sales was enjoyed across the board down the high street with the strongest increases at department stores and the large category of "other stores".The increase came against a weak background for retailers, with the annual growth of 1.6 per cent only just above May's decade low of 1.2 per cent. This probably isn't enough by itself to keep the Bank [of England] from cutting interest rates in August, but it's not hard to see how the decision could now be very close."Richard Batty, at Standard Life Investment, went further, saying the odds had widened on a no-change vote. It took the growth over the latest three months to 0.7 per cent from the previous quarter's 0.1 per cent, implying a boost to second-quarter GDP in figures published today. Retailers achieved the massive surge in sales despite cutting prices less than in the past, implying that shoppers have accepted greater pricing power on the high street.Neville Hill, at Credit Suisse First Boston, said: "This does refute the notion that the UK consumer is in the midst of a severe retrenchment. High street retailers enjoyed their strongest increase in sales last month for a year and a half, according to official figures yesterday that sowed the first seeds of doubt over the inevitability of an August cut in interest rates.