Retail sales see September fall

September's data follow an unexpected sales rise in August

UK retail sales are growing at their slowest annual rate in two-and-a-half years, figures from the Office for National Statistics (ONS) show.

High Street sales fell by 0.4% in September, taking annual growth to 1.8%, from 3.3% a month earlier.

However, it was better than the 0.9% monthly fall forecast by analysts.

Several reports have painted a darker picture of prospects for retailers, with consumers expected to cut back amid the current economic gloom.

Spending on clothing and household goods fell in September, the ONS said. However, sales at food stores rose slightly.

The data followed a surprise rise in August retail sales, which has been revised to 1.1%.

In recent weeks, several retailers have reported a fall in sales:

DSG International, which owns Currys and PC World, reported a 7% drop in sales in the half year to 18 October
Like-for-like sales fell 10.3% at Homebase and 3% at Argos, both owned by Home Retail Group, in the six months to the end of August
Marks & Spencer saw like-for-like sales fall 6.1% in the 13 weeks to 27 September
Arcadia Group, which owns Top Shop, saw like-for-like sales - which strip out the impact of new stores - fall 2.8% from 2007
Sales at JJB Sports, the retailer and health club group, fell 5.6% to £344.7m in the six months to the end of July.

"As we enter our first recession for 16 years, it goes without saying that times will remain incredibly tough for retailers over the remainder of 2008, and probably all of 2009," said Gavin George, head of retail at Ernst & Young.

"Christmas will be painful for much of the sector as consumers continue to batten down the hatches."

The official government data is less bleak than a report by the British Retail Consortium out last week, which pointed to a 1.5% sales fall in September.

The ONS explained the disparity, saying its figures were based on a larger sample of retailers across a broader range of retail sectors.

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