Data released on Thursday underscored why the Bank of England is signalling that it is in no rush to raise interest rates, even as Britain's economic growth continues to outpace that of most other industrialised nations.

The pound touched its lowest level in a week against the dollar after official figures showed retail sales fell more than expected in September.

Earlier, BoE deputy governor Ben Broadbent had said that any future rise in interest rates was likely to be gradual, and that underlying interest rates - which dictate investment returns and BoE policy - would stay low for some time.

Some of the fall in retail sales was caused by mild weather leading shoppers to put off buying winter clothes, which means sales may rebound in October. But the figures also suggested to some economists that shoppers were feeling the pinch of slow wage growth.

"It does look like consumers have reined in their spending to some degree after splashing out at a strong rate overall through the first half of the year," Howard Archer, at IHS Global Insight, said.

At the same time, industry data showed mortgage approvals in Britain fell in September to their lowest level since July last year, standing almost 10 percent lower than a year ago.

The fall follows other signs of a cooling in the housing market, which last year helped to fuel Britain's economic recovery but raised concerns about a potential bubble in prices.

"A year ago there were many of us who were concerned by the heady pace of property price rises. Today's figures suggest we are now experiencing a steadier housing market, and that's no bad thing," said Richard Woolhouse, chief economist at the BBA.

However, the slowdown was not good news for Foxtons, a real estate firm. It warned its profits would fall as prices fell in London's property market, after growing at an annual rate of about 20 percent earlier this year.

In a third set of figures, factory export orders in the three months to October fell to their lowest level since the start of last year as Europe's slowdown took its toll on British manufacturers.

"It's disappointing that a sluggish exports market has taken some of the steam out of manufacturing growth, which was going from strength to strength throughout most of this year," said Rain Newton-Smith, head of economics at employers group CBI, which conducted the survey.

Britain's economy is still on course to grow by more than 3 percent this year, in stark contrast to much of the euro zone, which is at risk of slipping back into recession.

Official figures due on Friday are expected to show growth cooled in the three months to September to a quarterly 0.7 percent from 0.9 percent in the April-June period. A further slowdown is possible in the final three months of the year.

The recovery in Britain's economy has pushed the unemployment rate down to 6 percent. But pay is still lagging behind inflation, a reflection in part of how many people have found work in low-paying industries.

A survey published on Thursday showed the biggest fall in four years in one measure of consumer confidence as many of those workers feared they could lose their jobs as the economy cools off.

With many households seeing little increase in their incomes, retailers are battling to win their custom by cutting prices. Thursday's ONS data showed prices in food stores fell for the first time, in annual terms, in nearly 10 years.

That kind of competition underscored the challenge for Tesco, Britain's biggest grocer, which saw a 5.5 percent fall in its second-quarter organic sales in its home market, excluding fuel.

(Additional reporting by William James and David Milliken)

By William Schomberg and Andy Bruce