Late rush lifts High Street gloom

Christmas shopping was left until the last minute

High street sales picked up in December following a slow Autumn, according to figures from the British Retail Consortium, but the underlying trend remains weak.

Retail sales performance this Christmas was stronger than might have been feared a month ago

Bridget Rosewell, chief economic adviser to BRC

Consumers left their Christmas shopping until the last minute, with sales only picking up after 21 December, according to the BRC figures.

A strong start to the sales was also marred by snow in some parts of the country and continuing transport problems in London.

But this did not prevent like-for-like retail sales - which strip out the effect of store openings and closures - rising by 3.4% in the year to the end of December.

Interest rates

Total sales were up 5.5% year-on-year, the strongest growth since May.

However, the BRC said the improvement was confined to the last two weeks of the month, during which there was one more trading day this year than last.

And the stronger than expected figures have not prevented calls for a cut in interest rates to stimulate demand.

A Confederation of British Industry (CBI) survey released last week also gave mixed signals, showing slower than expected expansion in the retail sector in December, with 49% of retailers reported improved sales and with 33% reporting slower sales.

Despite a better than expected December figure, the underlying trend in retail sales growth remains low

Bill Moyes, BRC director general

Bridget Rosewell, chief economic adviser to the BRC, said: "Retail sales performance this Christmas was stronger than might have been feared a month ago.

"However, this result has done no more than stabilise retail sales growth at a fairly low level.

"Consumers remain very sensitive to price, though tighter stocking decisions meant that markdowns were held off until after Christmas this year."

Underlying trend

Bill Moyes, director general of the BRC, said: "Despite a better than expected December figure, the underlying trend in retail sales growth remains low.

"In these circumstances, the Monetary Policy Committee must reduce interest rates to stimulate domestic demand."

The Bank of England's MPC will announce its next interest rate decision on Thursday, and economists are predicting rates will remain at 6%.

The BRC's survey covered five weeks from November 26 to December 30.