LONDON (REUTERS) - British retail sales growth unexpectedly surged to a two-year high in early September, industry data showed, boosting the chances of a pick-up in the pace of economic growth and a Bank of England interest rate rise in November.

The Confederation of British Industry's retail sales balance jumped to +42 from -10 in August, the highest in two years and far above all forecasts in a Reuters poll of economists.

British consumers have been squeezed by higher inflation caused in large part by the plunge in the pound after last year's Brexit vote.

The Bank of England said this month there were signs consumer demand might be picking up, helped by record-high employment, though it was too soon to tell if this would offset weak business investment.

Sterling rose modestly against the US dollar after the data and British government bond prices fell.

"The robust CBI survey will likely fan belief that the Bank of England could very well raise interest rates ... as soon as November," said Howard Archer, chief economist for consultants EY Item Club.

The figures suggested gross domestic product growth would pick up to 0.4 per cent in the third quarter from 0.3 per cent in the three months to June, he added.

The BoE has said most of its policymakers expect to back a first rate rise in more than a decade "in the coming months" if the economy and inflation pressures grow as they expect. Most economists polled by Reuters think this will come at the BoE's next meeting on Nov. 2.

Analysts were cautious about the significance of Wednesday's retail sales data, with the outlook for Britain's departure from the European Union still unclear and inflation continuing to squeeze household budgets.

"With the pressure on incomes set to persist, retailers will continue to face a challenging environment," CBI economist Anna Leach said.

Archer said the strength in September's CBI data partly reflected a snap back from weakness in August, and Samuel Tombs of Pantheon Macroeconomics said there was limited read-across to the official data that feeds into GDP calculations.

Official data have shown British retail sales volumes in August recorded their biggest monthly gain since April, although year-on-year sales growth remained well below last year's levels .

The CBI survey showed that retailers expect strong sales growth to continue into October, with the highest month-ahead expectations since the start of the year.

Clothing retailers and grocers were the best-performing sectors this month.

The BoE expects inflation to exceed 3 per cent in October, and to fall only slowly over the next couple of years. It also expects wage growth to rise even if there is little sign of it so far.

A survey of more than 1,000 export-focused businesses by Santander, released on Wednesday, showed that almost three- quarters feared an economic slowdown and two-thirds expected Brexit to hurt them over the coming year.

Nonetheless, more than 70 per cent of firms expect growth.

"We should not mistake concerns about the wider trade environment for a sense of pervading doom and gloom," senior Santander banker John Carroll said.