Christmas sales worst since 1981

The High Street did not enjoy December 2004

UK retail sales fell in December, failing to meet expectations and making it by some counts the worst Christmas since 1981.

Retail sales dropped by 1% on the month in December, after a 0.6% rise in November, the Office for National Statistics (ONS) said.

This is the poorest December sales performance for 23 years.

The ONS revised the annual 2004 rate of growth down from the 5.9% estimated in November to 3.2%.

The Bank of England has warned against reading too much into the numbers.

'Wait and see'

The full story of this Christmas' figures may not be clear until Easter, Bank of England Governor Mervyn King said.

Some analysts put a positive gloss on the figures, pointing out that the non-seasonally-adjusted numbers remained in positive territory, and showed a performance comparable with 2003.

The November-December jump last year was roughly in line with recent averages, although some way below the serious booms seen in the 1990s.

And figures for retail volume outperformed measures of actual spending, an indication that consumers are looking for bargains, and retailers are cutting their prices.

Mixed results

However, reports from some High Street retailers highlight the weakness of the sector.

Morrisons, Woolworths, House of Fraser, Marks & Spencer and Big Food all said that the festive period was disappointing.

KEY CHRISTMAS SALES FIGURES WH Smith: Down 1% in six weeks to 15 Jan Tesco: Up 7.6% in seven weeks to 8 Jan HMV: Up 6.4% in five weeks to 8 Jan Jessops: Up 4.5% in five weeks to 2 Jan The Body Shop: Up 6% in 10 weeks to 1 Jan Retail Stores: Up 14.2% in Dec until Christmas Ottakars: Up 2.2% in five weeks to 1 Jan Woolworths: Flat for four weeks to 1 Jan Sainsbury: Up 2.4% in 12 weeks to 1 Jan *All figures refer to like-for-like sales

And a British Retail Consortium survey found that Christmas 2004 was the worst for 10 years.

Yet, other retailers - including HMV, Monsoon, Jessops, Body Shop and Tesco - reported that festive sales were well up on last year.

Investec chief economist Philip Shaw said he did not expect the poor retail figures to have any immediate effect on interest rates.

"The retail sales figures are very weak, but as Bank of England governor Mervyn King indicated last night, you don't really get an accurate impression of Christmas trading until about Easter," said Mr Shaw.

"Our view is the Bank of England will keep its powder dry and wait to see the big picture."