Retail sales volume rose 0.4% in July and was up 3.3% from the same month a year ago, the Office for National Statistics said. Economists surveyed by Dow Jones Newswires had produced a consensus forecast for a flat monthly reading and a 2.5% annual increase. On a monthly basis, household good stores led by furniture and electrical posted a 4.5% rise in sales volumes, for the biggest monthly jump since August 2006, the ONS said. Non-specialized stores and textile, clothing and footwear stores saw sales fall 0.4%, while non-store retailing and repair rose 3.1%. Overall, non-food stores saw a 1.1% jump in sales volumes. Stores that sell primarily food saw sales fall by 1%. Also on Wednesday, the ONS said public sector borrowing totaled 8 billion pounds ($13.2 billion) in July, far exceeding economists' expectations for a 200 million pound net rise. The government paid back 5.2 billion pounds in July 2008. The British pound was little changed versus the U.S. dollar at $1.6530. London's FTSE 100 stock index was up 1.3%. The borrowing figures leave the United Kingdom with a current budget deficit of 5.1 billion pounds. Net debt totals 800.8 billion pounds, or 56.8% of gross domestic product. The government held a budget surplus of 7.8 billion pounds at the same time last year. Net public debt totaled 627.2 billion pounds, or 43.5% of GDP. "Today's figures add to the plethora of bleak news for public sector finances," said Richard Snook, senior economist at the Center for Economic and Business Research. "Borrowing for this financial year is likely to come close to 200 billion pounds -- giving whichever [party] takes power in 2010 a once-in-a-generation challenge to bring the debt and deficit back down to manageable levels." The shift reflected a drop in receipts as the recession continued to take a bite out of tax revenues. Receipts totaled 44.1 billion pounds, down from 52 billion pounds in the same month last year, with taxes on income and wealth declining by 5.9 billion pounds to 20.7 billion pounds. Total spending rose to 46.7 billion pounds from 43.4 billion pounds in July 2008. Separately, the Council of Mortgage Lenders said gross U.K. mortgage lending rose 26% from June to 16 billion pounds ($26.4 billion), but was down 36% from 24.9 billion pounds in July 2008. The CML said the data offered further evidence of a "modest improvement" over the summer after an "exceptionally weak" winter, but noted that activity remains subdued. The lending figure was the lowest for July since 2001 and 11 billion pounds below the July average seen over the previous seen years, the CML said

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