Page last updated at 09:53 GMT, Friday, 20 February 2009

UK retail sales rise in January

Shoppers in Cwmbran, Wales, last month
Shoppers took full advantage of the January sales

UK retail sales rose in January, as shoppers took advantage of big price cuts, official data has shown.

Total sales rose 0.7% last month compared with December, and by 3.6% compared with January 2008, said the Office for National Statistics (ONS).

The official figure confirmed earlier figures from the British Retail Consortium, which also said sales rose during the first month of the year.

Clothing and footwear saw the biggest rise in sales, up 6.1%, said the ONS.

'Sales tailed off'

The 0.7% rise in overall January sales compares with an average 0.1% decline expected by analysts.

We expect consumers to increasingly rein in their spending over the coming months
Howard Archer, IHS Global Insight

For the three months to the end of January, sales were up 3.2% compared with the same period a year earlier.

However, analysts cautioned that the rise in sales was unlikely to last.

"Anecdotal evidence suggests that January spending started off very strong, but then tailed off as the clearance sales ended," said Vicky Redwood, UK economist at Capital Economics.

"Meanwhile, rising unemployment and further falls in house prices will mean that households save any money freed up by falling inflation."

Ms Redwood added that she expected consumer spending to fall by about 3.5% this year.

Fellow analyst, Howard Archer, chief European and UK economist at IHS Global Insight, said he also expected sales to now decline.

"The increase in sales in January is fully consistent with the view that increasingly cash-strapped and pressurized consumers are looking to concentrate their spending when they can get the best value for their money," he said.

"We expect consumers to increasingly rein in their spending over the coming months."

David Kern, chief economist at the British Chambers of Commerce, said that despite the possible distortion caused by extensive discounting, there was "a possible resilience in consumer spending which needs to be nurtured".

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