Consumers shrugged off the effects of the global credit crunch and the crisis at Northern Rock to push UK retail sales up last month by the strongest annual rate in three years, official figures revealed.

However, yesterday's data also dented expectations of an imminent cut in interest rates.

Such strength on the high street at a time of heightened concern over the world economic outlook lent weight to the view that the Bank of England will leave rates steady at 5.75%.

The Office for National Statistics said retail sales climbed 6.3% from the same month a year earlier, the biggest gain since September 2004.

On a monthly basis sales climbed 0.6% on the month, down slightly from the 0.7% growth seen in August which was revised up from the previous estimate of 0.6%. September's rise was well above analysts' forecasts.

While the hefty rise was the result of deep high street discounting among many retailers, analysts believe the data is still too upbeat for the Bank of England to deliver a cut. Key minutes from the Bank published earlier this week reveal that the rate-setting Monetary Policy Committee is in no rush make a cut in November.

"The data confirm other evidence that the economy grew more strongly in the third quarter than the Monetary Policy Committee expected," said Vicky Redwood, an economist at Capital Economics. "Along with the MPC's lingering concerns, this points to rates staying on hold until next year."

Meanwhile, there are also signs that the housing market and broad money supply growth are coming off the boil.

The British Bankers' Association said mortgage lending rose by £5.8bn last month, easing from a near record of £6.1bn in August.

Nonetheless, sterling jumped nearly half a cent against the dollar and interest rate futures fell as investors reduced bets on an imminent rate cut from 5.75%, given the strength of the retail sales figures.

One pound yesterday bought $2.0465.

"It does not appear that the consumer's appetite for spending has been curbed at all yet by frequent reports of an imminent housing crash by the media, or by the financial market turmoil that has hit the British banking system," said Rob Carnell, an economist at ING.

At the same time, the 13-nation euro jumped to a new record against the dollar, breaking through the $1.43 mark after Washington reported a spike in jobless claims - the latest in a spate of bad economic news from the US.