Page last updated at 10:05 GMT, Thursday, 22 October 2009 11:05 UK

Zero growth for UK retail sales

Shoppers on Oxford Street in London
Consumers remain reluctant to spend

UK retail sales in September were unchanged from the previous month, official figures show, confounding analysts' expectations of an increase.

It was the second month in a row that sales have shown no monthly change.

The figures cast doubt on talk of an economic recovery, with consumers remaining cautious about spending.

It comes ahead of figures due on Friday that may show that the UK economy grew in the third quarter of 2009, the first growth for more than a year.

Despite the lack of monthly growth, retail sales were 2.4% above the level seen in September 2008, but this was below the 2.8% rate forecast by economists.

In September 2008, consumers were cutting back on their spending amid fears about a collapse in the financial system following the bankruptcy of Lehman Brothers.

'Surprisingly weak'

Sales in stores selling predominantly food fell by 0.1% in the month, while predominantly non-food stores showed no growth.

Sales in the textile, clothing and footwear category fell by 0.5%.

The pound fell against the US dollar and the euro following the release of the data.

"September's official UK retail sales figures are surprisingly weak given the strong rise in the timelier CBI and BRC surveys," said Vicky Redwood, UK economist at Capital Economics.

The CBI's distributive trades survey said that High Street activity had risen to its highest for five months in September, while the British Retail Consortium said the month had seen the "best total sales growth figures since January 2008".

There had also been expected to be a rise in spending triggered by consumers making purchases before the scheduled rise of VAT back from 15% to 17.5% in January.

Christmas sales

But there have been some gloomy forecasts from retailers.

Sir Philip Green, owner of Arcadia Group, which owns Topshop and Wallis, told the BBC: "I don't think it gets a lot better over the next year."

He was talking after Arcadia reported full-year pre-tax profits of £213.6m, up 13% from the £188.9m it made a year ago.

The department store Debenhams also reported a rise in profits, up 14% to £120.8m, lifted by sales of its "Designers at Debenhams" range.

Its chief executive Rob Templeman said he expected to need some hefty discounting to lure Christmas shoppers into stores.

"I think it will be as promotional as last year," he said.



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