Retail spending rose by a record rate in May, prompting fears that interest rates will have to rise again in a bid to prevent inflation soaring out of control.

Figures from the Office for National Statistics claimed sales rose by 3.5% in May, the strongest growth in a single month since January 1986.

The news has stunned analysts, who were expecting to see further evidence of the credit crunch affecting people's spending habits.

But while the sales surge is good news for retailers, it makes the Bank of England more likely to raise interest rates in a bid to control consumer spending and keep inflation in check.

The fear is that interest rate rises will further dampen the housing market and could push the economy into a full-on recession.