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Last Updated: Thursday, 16 February 2006, 10:30 GMT
Retail sales suffer January fall
Shoppers passing sales sign
Sales dropped off in January
A fall in UK retail sales during January has put the brakes on growth in the sector, official figures show.

In the three months to January sales growth slowed to 1.3% from 1.6% in the three months to December, the Office for National Statistics (ONS) said.

The slowdown followed a 1.3% fall in sales during January compared with the previous month, the biggest drop since December 2004.

However, the ONS said the trend in retail sales was "reasonably upward".

Compared with the same period a year ago, sales volumes in the three months to January actually rose 2.6%, the ONS added.

'Short-lived' spike

"January's UK retail sales figures confirm the evidence from the surveys that the pick-up in spending growth over Christmas was short-lived," said Capital Economics analyst Jonathon Loynes.

Both the British Retail Consortium and CBI recently found that after a late December surge, sales dropped off in January.

Shoppers have been tightening the purse strings in the face of job worries and concerns about the health of the economy, and have been particularly reluctant to purchase high-priced luxury items.

In an effort to lure more customers, shops have been cutting prices.

As a result the ONS revealed that the retail sales deflator - a measure of price pressures on the High Street - slipped another 1.2% in January, while the average weekly value of retail sales was unchanged from last year at 4.35bn.

The sharper-than-expected drop in monthly sales is expected to raise the prospect of a cut in interest rates by the Bank of England this year.

"From a rates perspective, this release will provide a much needed tonic to those looking for lower UK rates," said RBC Capital markets strategist Richard McGuire.


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