UK interest rate cuts needed to spur discretionary spending, says Sainsbury's boss

LONDON (Reuters) - Britain needs several interest rate cuts to stimulate discretionary spending, the boss of British supermarket group Sainsbury's said on Tuesday.

The Bank of England kept its bank rate unchanged at a 16-year high of 5.25% last month, ahead of a July 4 national election, with some policymakers saying their decision not to cut rates was "finely balanced".

"Customers are continuing to be cautious, particularly in areas of discretionary spending," Sainsbury's CEO Simon Roberts told reporters after updating on first quarter trading.

"Until we see sequential interest rate cuts, hopefully as soon as possible, I think that caution in the consumer is going to continue in those products that are more discretionary to buy," he said.

Sainsbury's saw robust grocery sales in the quarter but weakness in non-food categories, which also reflected both poor early summer weather denting sales of seasonal categories and strength in sales in the same period last year.

Roberts said when the weather did improve, consumers did spend in non-food areas.

Last week, when Britain enjoyed a few days of hotter weather, Sainsbury's sold more fans and cooling equipment than it had sold in all of the rest of the year.

"It just shows that when the weather does turn, customers do want to buy into what they need to enjoy the summer," said Roberts.

Thursday's election is expected to see the Labour Party return to power after 14 years of Conservative rule.

Roberts said he wanted to see the urgent reform of business rates and the apprenticeship levy, a long-term plan for the UK food sector, stability and strong engagement between business and government.

(Reporting by James Davey, editing by Paul Sandle)