Page last updated at 12:23 GMT, Tuesday, 11 November 2008

Retail sales 'decline in October'

Shopper on London's Oxford Street
UK shoppers have cut back on their spending

UK retail sales have fallen over a 12-month-period for the first time in more than three years, a report has found.

Total sales in October were 0.1% lower than the same month last year, said the British Retail Consortium (BRC).

The latest sign the UK may be entering recession, it was the first time that total monthly sales had fallen from a year earlier since April 2005.

On a like-for-like basis - which pulls out the impact of new store openings - October sales were down 2.2%.

'Seriously poor numbers'

The BRC's latest monthly Retail Sales Monitor - which is co-compiled by accountancy group KPMC - found that food and drink, and footwear, were the only two sectors to record like-for-like growth in sales in October.

There is no doubt retailers will need to resort to heavy discounting to bolster sales over the next six weeks
KPMG head of retail Helen Dickinson

Sales of clothing, furniture, and home accessories were all lower.

"These are seriously poor numbers, especially in the run-up to Christmas," said BRC director general Stephen Robertson.

"Like-for-like sales have now fallen in seven of the last eight months, with every sector down on a year ago apart from food and footwear."

The report added that sales were being driven by extensive discounting.

"A fall in the value of total sales is extremely rare - the last time it occurred, in April 2005, was due to the timing of Easter," said KPMG head of retail Helen Dickinson."

"There is no doubt retailers will need to resort to heavy discounting to bolster sales over the next six weeks."

Ms Dickinson added that it was "unlikely" last week's 1.5 percentage point cut in UK interest rates would do much to increase spending on the High Street because "historically it takes a number of months for rate cuts to feed through".

The UK economy shrank for the first time in 16 years between July and September.

An economy is generally considered to be in recession when it records two successive quarters of contraction, so all eyes are now on the key October to December period.

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